Oweiss v. Erie Ins. Exchange

• Decision Date: 01 September 1985
• Docket Number: No. 1157,1157
• Citation: 67 Md.App. 712,509 A.2d 711
• Parties: Zakaria M. OWEISS v. ERIE INSURANCE EXCHANGE. ,
• Court: Court of Special Appeals of Maryland

Page 712

67 Md.App. 712

509 A.2d 711

Zakaria M. OWEISS v. ERIE INSURANCE EXCHANGE.

No. 1157, Sept. Term, 1985.

Court of Special Appeals of Maryland.

June 4, 1986.

J. Hardin Marion (Diane V. D'Aiutolo and Tydings & Rosenberg, on brief), Baltimore, for appellant.

D. Lee Rutland (James T. Wharton and Digges, Wharton & Levin, on brief), Annapolis, for appellee.

Argued before BLOOM, KARWACKI and WENNER, JJ.

KARWACKI, Judge.

After a bench trial, the Circuit Court for Montgomery County rendered a declaratory judgment that Erie Insurance Exchange owed no duty of indemnity or defense to Zakaria M. Oweiss, whom it insured under automobile and homeowner's liability insurance policies with respect to a suit for personal injuries brought against Oweiss by Wallace Norris. This appeal is from that judgment.

On December 10, 1982, on 19th Street between M and N Streets, N.W., in the District of Columbia, automobiles driven by Norris and Marianne Oweiss, the appellant's wife, came into slight contact. Neither personal injuries nor property damage resulted. Both drivers stopped, got out of their vehicles, and began discussing who was at fault and who had to disclose insurance information. The two quickly got into a disagreement about both points of their discussion. Mrs. Oweiss went back to her car, which was equipped with a telephone, and called both the police and her husband. The appellant, whose office was located only a few blocks from where the accident occurred, arrived before the police. He checked his wife's car for damage while Mr. Norris, who in the meantime had gone back to his car, returned to talk with Mrs. Oweiss again. She apparently wanted to see Mr. Norris' driver's license, but did not feel obligated to show her own. She then accused Mr. Norris of having swerved in and out of traffic, to which Mr. Norris retorted, "Lady, you're a liar."

At this point, the appellant became involved. Mr. Norris testified that the appellant "grabbed me by the throat, and he had his two fingers and he punched them ... in the solar plexus.... He forced me back to the car, and had me bent over the trunk...." Mr. Norris further stated that when he was backed up against the car by the appellant, he injured his wrist. The police arrived shortly thereafter, but, as there was no visible damage to the automobiles, no accident report was filed. Mr. Norris made no mention to the police officer of the altercation between himself and the appellant.

On February 23, 1983, Mr. Norris filed a one count declaration against the appellant. He alleged that at the scene of the accident, the appellant "grabbed the plaintiff by the throat" and "did then and there at that time with his hands, fist and body, willfully, maliciously and wrongfully assault, strike, beat, batter and bruise the plaintiff."

The liability coverage section of the appellant's automobile policy provided that the appellee would pay "all sums for which the law holds you responsible for damages arising out of the ownership or use of a car we insure" and that, "[i]f you are sued for damages, we will defend you with a lawyer we choose, even if the allegations are not true." The policy contained the following exclusion: "We do not cover ... [n]or will we pay for: (g) damages caused intentionally by or at the direction of anyone we protect." (Emphasis supplied). The homeowner's policy provided with regard to personal liability coverage that the appellee would pay "all sums which anyone we protect becomes legally obligated to pay as damages because of bodily injury or property damage covered by this policy," but excluded coverage for "bodily injury or property damage expected or intended by anyone we protect." (Emphasis supplied). In that policy the appellee further promised, "If anyone we protect is sued for damages, we will defend him with a lawyer we choose, even if the allegations are not true."

On March 30, 1984, the appellee filed the declaratory judgment action that has resulted in this appeal. Then, on June 5, 1984, Norris filed an amended declaration in his pending suit against the appellant, adding a count which alleged that the appellant "negligently caused the plaintiff to suffer serious, painful and permanent injuries to his body, specifically, his hand."

The appellee received no notice of the amended declaration until sometime in August or September, 1984, when its attorney was advised of the filing by the appellant's attorney who pointed out that the Norris suit included allegations of negligence and demanded that the appellee assume the costs of the appellant's defense in that case. The appellee declined to furnish a defense pending the outcome of the declaratory judgment action.

On March 21, 1985, the Norris suit was settled by the appellant's payment of the sum of $7,200, ostensibly on the sole basis of the negligence count. On April 1, 1985, the declaratory judgment action was tried.

The appellant presents the following three questions:

I. Is the insurer obligated to defend its insured when an intentional tort claim is amended to include a claim for negligence?

II. When the insurer has breached its duty to defend, is it obligated to indemnify its insured for the amount reasonably paid in a good faith settlement of the negligence claim?

III. Because of the insurer's unjustified refusal to defend the tort suit against its insured, is it obligated to reimburse for all attorneys' fees and costs he has incurred?

I. Duty to Defend

The obligation of an insurer to defend its insured under a liability insurance policy such as the ones sub judice is determined by the allegations in the tort action. Brohawn v. Transamerica Ins. Co., 276 Md. 396, 407, 347 A.2d 842 (1975); Ohio Casualty Ins. v. Lee, 62 Md.App. 176, 189, 488 A.2d 988, cert. denied, 303 Md. 471, 494 A.2d 939 (1985). In those cases the policy language being construed required the insurer to defend any suit against the insured which alleged a claim covered by the policy "even if the allegations of the suit are groundless, false or fraudulent." The language before us in this case mandated a defense "even if the allegations are not true." Under either provision the insurer's duty to defend is absolute so long as the allegations upon which the underlying tort action is brought are within the policy coverage.

Where a tort plaintiff alleges facts which not only leave the claim outside of the coverage of the policy, but also preclude the potentiality that the claim could be covered by the policy, the insurer has no duty to defend. Brohawn, 276 Md. at 408, 347 A.2d 842. The instant case is an example of this. The facts as originally alleged allowed the appellee to decline to defend the appellant under either policy for two separate reasons; the alleged damages to the plaintiff did not arise out of the ownership or use of a car insured under the automobile policy and both policies specifically excluded coverage for "damages caused intentionally by ... anyone we protect."

Although the appellee had no duty to defend the suit against the appellant under the original declaration, we hold that a duty did arise under the homeowner's policy after Norris amended his declaration to allege damages resulting from the negligence of the appellant. The suit was not amended, however, until June 5, 1984, and the appellee was not notified of his amendment until sometime later. ¹ The appellee's duty to defend did not arise until it was notified of the negligence count and asked to assume the costs of defense. Brohawn, 276 Md. at 407, 347 A.2d 842; Washington v. Federal Kemper Ins., 60 Md.App. 288, 297, 482 A.2d 503 (1984), cert. denied, 302 Md. 289, 487 A.2d 292 (1985).

The trial judge, in his memorandum opinion accompanying the declaratory judgment from which this appeal is taken, rejected on two bases the claim of the appellant for reimbursement of defense costs after the date that the appellee was notified of a claim within the coverage of the homeowner's policy. First, noting from the docket in the Norris suit that no activity had taken place between that notice and the settlement of the action, he found that the appellant had suffered no damage from the appellee's default. The evidence before him simply did not support that conclusion. The fact that no pleadings had been filed or discovery employed during the period in question does not establish the lack of any legal services furnished in defense of the Norris suit. Moreover, counsel for both part...