Glaser v. Hartford Cas. Ins. Co., No. CIV.RDB 04-1785.

• Decision Date: 04 April 2005
• Docket Number: No. CIV.RDB 04-1785.
• Citation: 364 F.Supp.2d 529
• Parties: Bert M. GLASER, M.D., P.A. t/a The Bert M. Glaser National Retina Institute, Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Maryland

364 F.Supp.2d 529

Bert M. GLASER, M.D., P.A. t/a The Bert M. Glaser National Retina Institute, Plaintiff, v. HARTFORD CASUALTY INSURANCE COMPANY, Defendant.

No. CIV.RDB 04-1785.

United States District Court, D. Maryland, Northern Division.

April 4, 2005.

Kevin J Pascale, Esquire, T. Christine Pham, Esquire, Rosenberg, Martin, Funk and Greenberg LLP, Baltimore, Maryland, for Plaintiff.

George E Reede, Jr., Esquire, Lucinda Davis, Esquire, Niles, Barton and Wilmer LLP, Baltimore, Maryland, for Defendant.

MEMORANDUM OPINION

BENNETT, District Judge.

Pending before this Court are cross motions for summary judgment filed by Plaintiff Bert M. Glaser, M.D., P.A. ("Plaintiff" or "Glaser") and Defendant Hartford Casualty Insurance Co. ("Defendant" or "The Hartford"). Plaintiff originally filed a complaint against The Hartford in the Circuit Court for Baltimore City, on May 7, 2004, seeking a declaratory judgment (Count I) and alleging breach of contract (Count II) based on an insurance contract dispute. Defendant removed this case to this Court on June 7, 2004, pursuant to 28 U.S.C. § 1441. As this Court has jurisdiction over this action based on diversity of citizenship,¹ pursuant to 28 U.S.C. § 1332, the law of Maryland applies to this action.² The Hartford does not dispute that the terms of the insurance policies it provided to Plaintiff cover losses resulting from embezzlement by a former employee of the Plaintiff, but the parties disagree as to the coverage limits under the policies at issue. For the reasons stated below, the Plaintiff's Motion for Summary Judgment is GRANTED in the amount of $51,923.06 and the Defendant's Motion for Summary Judgment is DENIED.

BACKGROUND

Glaser is a retina surgeon whose practice, The Bert M. Glaser National Retina Institute ("NRI"), has offices in Maryland and Virginia. In 1999, Plaintiff first applied for an insurance policy with The Hartford. The Hartford issued a Hartford Spectrum Business Insurance Policy to NRI for the policy year beginning August 1999 and ending August 2000. Although the policy itself did not contain coverage for employee dishonesty, endorsements that were provided as part of the policy package covered loss from employee dishonesty up to a $25,000 limit per occurrence. The Hartford provided substantially similar coverage to NRI under policies spanning the next four years — August 2000 to 2001; August 2001 to 2002; August 2002 to 2003; and August 2003 to 2004. (Pl.'s Mot. at 3, citing Ex. A).³ It is undisputed that even though the policies generally contained similar language over the five successive policy years, the premiums varied, the levels of coverage were different, and the property covered changed. (Pl.'s Mot. at 3, 10.)

In August of 2003, Plaintiff discovered that an employee named Herman R. Lawson ("Lawson"), who began working for NRI as its Accounting and Finance Manager on June 26, 2000, had been stealing money from NRI. Over the course of three policy years (2001 to 2002, 2002 to 2003, and 2003 to 2004) NRI lost $168,493.12 due to Lawson's embezzlement. In policy year 2001 to 2002, Lawson forged checks, fraudulently used NRI credit cards, and made fraudulent payments to himself totaling $31,668.10. Using the same fraudulent means, Lawson embezzled $134,901.94 from NRI during the policy year spanning from 2002 to 2003. During the 2003 to 2004 policy year, Lawson ordered NRI's payroll provider to issue one unauthorized payment to Lawson via direct deposit totaling $1,923.08. Lawson was terminated on August 8, 2003.

In February 2004, a grand jury in Baltimore County indicted Lawson, alleging that between October 2001 and July 2003 he stole money in excess of $500 from NRI. The indictment states that the theft was "pursuant to one scheme and continuing course of conduct." (Def.'s Mot. at Ex. E.) Lawson plead guilty to this offense and was sentenced to a five year suspended sentence. (Id.) In September 2004, Lawson was ordered to pay restitution to Plaintiff in the amount of $162,806.34 at the rate of $500 a month, to commence in October 2004. (Id.) Glaser submitted a claim to The Hartford seeking coverage for, what Plaintiff characterized as, seven separate losses caused by Lawson between 2001 and 2004. On February 11, 2004, The Hartford rejected the contention that Plaintiff was entitled to coverage for seven separate losses under the Policy, but tendered payment of $25,000 to NRI. The Hartford does not dispute that NRI is covered under the policies for Lawson's dishonest acts, but it contends that each instance of embezzlement by Lawson does not constitute a separate "occurrence" as defined by the policies. Instead, The Hartford asserts that Lawson's embezzlement, which spanned three policy years, constitutes one occurrence limited to coverage totaling $25,000. While Glaser agrees that each occurrence of employee dishonesty is capped at $25,000, he continues to contend that there were multiple occurrences spanning three policy years. Glaser asserts that there were three occurrences of embezzlement during both the 2001 to 2002 policy year and the 2002 to 2003 policy year and one occurrence during the 2003 to 2004 policy year. Under its interpretation of the policies' limitations, Plaintiff seeks coverage in the amount of $97,606.72.⁴ Glaser moves for a declaratory judgment that the policies cover $97,606.72 of its loss and for summary judgment on its breach of contract claim based on The Hartford's refusal to pay the full $97,606.72. The Hartford has also moved for summary judgment, asserting that it is not liable for coverage over the $25,000 already provided to NRI.

APPLICABLE STANDARDS OF LAW

I. Declaratory Judgment

"In a case of actual controversy within its jurisdiction,... any court of the United States, upon filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). As this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, pursuant to the Declaratory Judgment Act, this Court has discretion to hear this action requesting declaratory judgment. The United States Court of Appeals for the Fourth Circuit has "held that district courts have great latitude in determining whether to assert jurisdiction over declaratory judgment actions." Aetna Cas. & Sur. Co. v. Ind-Com Elec. Co., 139 F.3d 419, 422 (4th Cir.1998). In addition, the Fourth Circuit has provided guidance on the exercise of this discretion. Declaratory judgment should not be used "to try a controversy by piecemeal, or to try particular issues without settling the entire controversy, or to interfere with an action which has already been instituted." Aetna Cas. & Sur. Co., 139 F.3d at 422 (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.1937)). The Maryland Court of Special Appeals has noted that declaratory judgment "is appropriate for the purpose of construing an insurance policy and determining the rights and obligations of insurer and insured under its provisions." Aetna Cas. & Sur. Co. v. Brethren Mut. Ins. Co., 38 Md.App. 197, 206, 379 A.2d 1234, 1239 (1977).

II. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c) (emphasis added). In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), the Supreme Court explained that only "facts that might affect the outcome of the suit under the governing law" are material. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Moreover, a dispute over a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The Court further explained that, in considering a motion for summary judgment, a judge's function is limited to determining whether sufficient evidence supporting a claimed factual dispute exists to warrant submission of the matter to a jury for resolution at trial. Id. at 249, 106 S.Ct. 2505. In that context, a court is obligated to consider the facts and all reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

When both parties file motions for summary judgment, as here, the court applies the same standards of review. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991); ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 45 n. 3 (4th Cir.1983) ("The court is not permitted to resolve issues of material facts on a motion for summary judgment — even where ... both parties have filed cross motions for summary judgment.") (emphasis omitted), cert. denied, 469 U.S. 1215, 105 S.Ct. 1191, 84 L.Ed.2d 337 (1985). The role of the court is to "rule on each party's motion on an individual and separate basis, determining, in each case, whether a judgment may be entered in accordance with the Rule 56 standard." Towne Mgmt. Corp. v. Hartford Acc. & Indem. Co., 627 F.Supp. 170, 172 (D.Md.1985). "[B]y the filing of a motion [for summary judgment] a party concedes that no issue of fact exists under the theory he is advancing, but he does not thereby so concede that no issues remain in the event his adversary's theory is adopted." Nafco Oil & Gas, Inc. v. Appleman, 380 F.2d 323, 325 (10th Cir.1967); see also McKenzie v. Sawyer, 684 F.2d 62, 68 n. 3 (D.C.Cir.1982) ("neither party waives the right to a full trial on the merits by filing its own motion."). However, when cross-motions for summary judgment demonstrate a basic agreement concerning what legal theories and material facts are...