Francis v. Allstate Ins. Co.

• Decision Date: 07 March 2013
• Docket Number: No. 12–1563.,12–1563.
• Citation: 709 F.3d 362
• Parties: Thomas Michael FRANCIS; Danielle Francis, Plaintiffs–Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

709 F.3d 362

Thomas Michael FRANCIS; Danielle Francis, Plaintiffs–Appellants,

v.ALLSTATE INSURANCE COMPANY, Defendant–Appellee.

No. 12–1563.

United States Court of Appeals,Fourth Circuit.

Argued: Jan. 30, 2013.

Decided: March 7, 2013.

ARGUED:Edward J. Brown, Law Office Of Edward J. Brown, LLC, Ellicott City, Maryland, for Appellants. Ronald Weldon Cox, Jr., McCarthy Wilson, LLP, Rockville, Maryland, for Appellee. ON BRIEF:Thomas Patrick Ryan, McCarthy Wilson, LLP, Rockville, Maryland, for Appellee.

Before DAVIS, DIAZ, and THACKER, Circuit Judges.

Affirmed by published opinion. Judge DAVIS wrote the opinion, in which Judge DIAZ and Judge THACKER joined.

OPINION

DAVIS, Circuit Judge:

Appellants Thomas and Danielle Francis (“the Francises” or “Appellants”) appeal an order of the district court granting summary judgment to Appellee Allstate Insurance Company (“Allstate”). In March 2011, Appellants brought this action in Maryland state court seeking a declaration as to Allstate's duty under a renters insurance policy to defend and indemnify the Francises in a tort suit brought against them, and others, in the Circuit Court for Frederick County, Maryland. Meanwhile, in the tort suit, the state court entered a final judgment in favor of all defendants (including the Francises) on April 6, 2011. Thereafter, Allstate filed a Notice of Removal, and this action was removed to the United States District Court for the District of Maryland on the basis of diversity jurisdiction.

After the district court denied Appellants' first motion to remand, Allstate filed a motion for summary judgment, contending that the Francises' renters insurance policy, issued in California, did not provide coverage for the claims asserted in the underlying tort action. In response, Appellants moved a second time to remand, now on the ground that (as they sought only the costs of their defense of the tort suit, rather than any potential indemnity) the amount in controversy did not exceed the $75,000 jurisdictional threshold, and thus the district court lacked subject matter jurisdiction. Appellants also opposed Allstate's motion for summary judgment on the merits.

On April 18, 2012, the district court denied the second motion to remand and granted Allstate's motion for summary judgment, concluding that Allstate did not have a duty to defend. Francis v. Allstate Ins. Co., 869 F.Supp.2d 663 (D.Md.2012). Appellants filed a timely notice of appeal. For the reasons that follow, we affirm.

I.

A.

In March 2008, Danielle Francis, a California resident, and her minor son Thomas were sued by Troy Towers in the Circuit Court for Frederick County, Maryland (“the Underlying Action”). Towers worked as a Resident Aide at the Maryland School for the Deaf (“MSD”), which Thomas Francis attended. ¹ The complaint in the Underlying Action asserted claims of defamation, invasion of privacy-false light, malicious prosecution, civil conspiracy and intentional infliction of emotional distress. The complaint alleged that Thomas Francis, with the assistance of his parents, “made false statements about [Towers], claiming he had sexually abused ... and assaulted [ ] Thomas Francis and other students at MSD.” J.A. 38. It further averred that the Francises knowingly made the false and defamatory statements about Towers, or in the alternative, that they negligently made them. Criminal charges had been filed against Towers based in part on the alleged statements but were later dismissed; Towers alleged that the statements injured his reputation in the community and at MSD, that as a result of the statements he suffered mental anguish and humiliation, and that he had been temporarily suspended without pay from his employment.

Appellants did not and do not deny making the alleged statements, but contend that Ms. Francis made them for the sole purpose of protecting her son and “without intent to slander Mr. Towers [ ]or invade his privacy.” Appellants' Br. 3. Additionally, they argue that Thomas Francis made the statements to school officials, and later to police, “solely for [his own] protection and not to defame or otherwise harm Mr. Towers.” Id. at 4.

At the time of the allegedly defamatory statements, the Francises were insured under a California Renters Policy (“the Policy”) issued by Allstate. The Policy covered Danielle Francis's residence in Santa Clara, California, and was mailed to her at that residence. The Policy provided, in relevant part:

Subject to the terms, conditions and limitations of this policy, Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies, and is covered by this part of the policy.

[Allstate] may investigate or settle any claim or suit for covered damages against an insured person. If an insured person is sued for these damages, [Allstate] will provide a defense with counsel of [its] choice, even if the allegations are groundless, false or fraudulent. [Allstate] [is] not obligated to pay any claim or judgment after [it] [has] exhausted [its] limit of liability.

J.A. 77, Policy at p. 14.

The Policy defines “occurrence” as:

[A]n accident, including continuous or repeated exposure to substantially the same general harmful conditions, during the policy period, resulting in bodily injury or property damage.

J.A. 66, Policy at p. 3.

“Bodily Injury” is defined as “physical harm to the body, including sickness or disease, and resulting death....” J.A. 65, Policy at p. 2. “Property Damage” is defined as “physical injury to or destruction of tangible property, including loss of its use resulting from such physical injury or destruction.” J.A. 66, Policy at p. 3.

The Policy also contains a choice-of-law provision which states:

This policy is issued in accordance with the laws of California and covers property or risks principally located in California. Subject to the following paragraph, the laws of California shall govern any and all claims or disputes in any way related to this policy.

If a covered loss to property, or any other occurrence for which coverage applies under this policy happens outside California, claims or disputes regarding that covered loss to property, or any other covered occurrence may be governed by the laws of the jurisdiction in which that covered loss to property, or other covered occurrence happened, only if the laws of that jurisdiction would apply in the absence of a contractual choice of law provision such as this.

J.A. 89, Policy Endorsement, California Renters Amendatory Endorsement.

The Francises initiated this action in the Circuit Court for Frederick County, Maryland, contending that Allstate had a duty to defend them, under the Policy, against Towers's suit. The Complaint for Declaratory Judgment asserted that, in addition to Towers's false-light contentions, Towers “sustained bodily injury as a result of the [Francises'] alleged acts— e.g. impotency.” J.A. 9. At the time the declaratory judgment action was filed, the Francises (by their privately retained counsel) had already filed a motion for summary judgment in the Underlying Action. That motion was granted on March 16, 2011, and final judgment in favor of all defendants was entered April 6, 2011. At the conclusion of the Underlying Action, the Francises had expended $66,347 in attorney's fees and costs for their defense.

On April 20, 2011, Allstate timely removed the declaratory judgment action to the United States District Court for the District of Maryland on the basis of diversity jurisdiction. The Francises filed a timely motion to remand the case to state court on May 19, 2011, contending that the removal was untimely because the thirty-day time limit for removal had expired. The district court found the removal timely and denied the motion to remand.

Allstate filed a motion for summary judgment in the declaratory judgment action on October 28, 2011, asserting that it had no duty to defend the Francises because, under California law, the statements made about Towers did not constitute an “accident,” and therefore claims arising from them were not covered by the Policy.² The Francises filed a second motion to remand the case, which challenged the district court's subject matter jurisdiction on the basis that the $75,000 amount-in-controversy threshold had not been met, and they also substantively challenged Allstate's denial of coverage of the Underlying Action.

On April 17, 2012, the district court denied the Francises' second motion for remand and granted Allstate's motion for summary judgment. This timely appeal followed.

II.

This Court reviews the denial of a motion to remand to state court de novo. Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.2005). Likewise, we review a district court's grant of summary judgment de novo, applying the same standard used by the district court. Reynolds v. Am. Nat'l Red Cross, 701 F.3d 143, 149 (4th Cir.2012). The Court “view[s] all facts and reasonable inferences therefrom in the light most favorable to the nonmoving party.” T–Mobile Ne., LLC v. City Council of City of Newport News, Va., 674 F.3d 380, 385 (4th Cir.2012) (internal quotations and citations omitted). Under Federal Rule of Civil Procedure 56(a), summary judgment should be granted “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.” Fed.R.Civ.P. 56(a). “The moving party is ‘entitled to judgment as a matter of law’ when the nonmoving party fails to make an adequate showing on an essential element for which it has the burden of proof at trial.” Maracich v. Spears, 675 F.3d 281, 291 (4th Cir.2012), cert. granted,––– U.S. ––––, 133 S.Ct. 98, ––– L.Ed.2d –––– (2012).

III.

Appellants first contend the district court erred in rejecting their jurisdictional challenge because the amount-in-controversy requirement was not met. The removal of a civil case...