Lumbermens Mut. Cas. Co. v. ECCLES SEC. AGENCY
| Decision Date | 17 April 1986 |
| Docket Number | Civ. No. Y-84-4455. |
| Citation | 632 F. Supp. 680 |
| Court | U.S. District Court — District of Maryland |
| Parties | LUMBERMENS MUTUAL CASUALTY CO. v. ECCLES SECURITY AGENCY, INC. |
Mitchell Stevan, Baltimore, Md., and Steven R. Silberman, Baltimore, Md., for plaintiff.
Michael Bowen Mitchell, Baltimore, Md., for defendant.
Lumbermens Mutual Casualty Company ("Lumbermens") sued the Eccles Security Agency, Inc. ("Eccles") for insurance premiums due on a policy for workmen's compensation insurance issued in 1981, and renewed in 1982. Eccles filed several counterclaims. After hearing the plaintiff's case before a jury on March 12 and 13, the Court directed a verdict in favor of Lumbermens both as to its original claim and as to all of Eccles' counterclaims. The Court makes the following findings of fact and conclusions of law.
In 1978, Eccles sought workmen's compensation coverage for the District of Columbia, but was unable to obtain it. On January 24, 1978, Eccles applied to the Mid-Atlantic Compensation Rating Bureau's ("MCRB") "assigned risk" program through the Cugle Insurance Agency of Ellicott City, Maryland. Iris J. Eccles, the Corporate Secretary for Eccles, signed the "assigned risk" application form. Plaintiff's Exhibit 1. The first line of that application stated: "The undersigned employer hereby applies for workmen's compensation insurance in District of Columbia handwritten and expressly represents that such insurance is sought in good faith."
Several lines lower on the MCRB application form, Eccles listed "Location of all work places by Town or City with Street and Number" as "National Arboretum, Wash., D.C." At the bottom of the first page of the application form was a blank asking for "Complete description of operations, by locations...." Eccles responded, "First contract is Armed Guard Service for the National Arboretum, Wash., D.C."
The MCRB accepted Eccles' application and assigned Eccles to Lumbermens. Lumbermens issued successive one-year contracts to Eccles in 1978, 1979, and 1980.
On February 2, 1981, Lumbermens wrote a letter to Eccles, which read:
Plaintiff's Exhibit 2. The parties stipulated that "Eccles paid a deposit premium of $2,271.00 on or about March 1, 1981 for policy 1CL 802 901." Pre-Trial Order stipulation J.
On January 20, 1982, Lumbermens wrote a letter to Eccles, which read:
Plaintiff's Exhibit 4. The parties stipulated that "Eccles paid a deposit premium of $1,952.00 or or about March 15, 1982 for policy 2CL 802 901." Pre-Trial Order stipulation K.
Later in 1982, Lumbermens learned for the first time that Eccles had contracts to guard other facilities in the District of Columbia in addition to the National Arboretum. Lumbermens asked to inspect and audit Eccles' payroll records for 1981 and 1982 in order to assess higher premiums reflecting that fact. (See condition number four, jacket page 2 of the insurance contracts between Eccles and Lumbermens). Eccles refused to allow an audit, and also refused to pay an estimated audit based on payroll estimates Lumbermens obtained from other sources. Lumbermens then filed this suit, amending its complaint for damages upwards when an audit revealed an even higher payroll than Lumbermens' outside information had indicated. Eccles argued that the language of the insurance contracts was ambiguous, and that it had intended to enter into insurance contracts covering its operations at the National Arboretum only.
The two insurance policies issued to Eccles and countersigned by Lumbermens were identical save for the dates of coverage. They contained two pages of "Declarations" applying to the specific policy, and three jacket pages of fine print setting out the "Insuring Agreements," "Exclusions," and "Conditions" of the contracts. Lumbermens filled out the information in the first two "Declarations" pages, then submitted the contracts to Eccles.
On both contracts submitted to Eccles, Lumbermens filled out Item one of the first Declarations page by identifying the Eccles Security Agency, Inc. as the insured and by filling in the address of Eccles' home office in Columbia, Maryland. Item one also asked for "Locations — All usual workplaces of the Insured at or from which Operations Covered by this Policy are conducted are located at the above Address unless otherwise stated herein." Lumbermens filled in "National Arboretum, Washington, D.C."
Section three of the Declarations provided, "Coverage A of this Policy applies to the Workers' Compensation and Occupational Disease Law of Each of the following states:" Lumbermens filled in that space with "District of Columbia."
Eccles argued that the insurance policy was ambiguous, because Section one of the Declarations could be read to mean that the insurance policy applied to Eccles' operations at the National Arboretum only, instead of to all of Eccles' operations in the District of Columbia.* That argument is untenable in light of the unambiguous terms of the rest of the contract.
Item 3 of the Declarations designated the District of Columbia as the area of coverage.
Further down on jacket page one, under the "Exclusions" section, the contracts provided:
Under District of Columbia workmen's compensation law, applicable to the contracts (see below), Eccles could not obtain other insurance or become a qualified self-insurer without first canceling its insurance with Lumbermens, so the exclusion did not apply. Thus, the contract clearly covered "any workplace not described in Item 1...."
On jacket page three, condition number 16 provided: "Terms of Policy Conformed to Statute, Coverage A. Terms of this...
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