PRINCE GEORGE'S CTY. v. LGIT

• Decision Date: 08 October 2004
• Docket Number: No. 1768,1768
• Citation: 159 Md. App. 471,859 A.2d 353
• Parties: PRINCE GEORGE'S COUNTY v. LOCAL GOVERNMENT INSURANCE TRUST.
• Court: Court of Special Appeals of Maryland

859 A.2d 353

159 Md. App. 471

PRINCE GEORGE'S COUNTY v. LOCAL GOVERNMENT INSURANCE TRUST.

No. 1768, Sept. Term, 2003.

Court of Special Appeals of Maryland.

October 8, 2004.

Geoffrey S. Gavett (Rhoda S. Barish, Gavett and Datt, PC, on the brief), Rockville, for appellant.

Jefferson L. Blomquist (Peter C. Ismay, Funk & Bolton, PA, on the brief), Baltimore, for appellee.

Panel: KENNEY, DEBORAH S. EYLER and KRAUSER, JJ.

KRAUSER, Judge.

We are asked to resolve an insurance coverage dispute between appellant, Prince George's County (the "County"), and its excess liability insurer, appellee, Local Government Insurance Trust (the "Trust" or "LGIT").¹ They disagree as to whether the County is entitled to indemnification from the Trust for a judgment it paid, following a jury trial, to Freddie McCollum, Jr.² for injuries he received at the hands of the Prince George's County police. This dispute arose when the Trust denied the County's request for indemnification, asserting that the County had violated the terms of its excess liability policy, by, among other things, failing to notify the Trust of McCollum's claim before a verdict was rendered. That, in turn, prompted the County to file, in the Circuit Court for Prince George's County, the lawsuit that is now before us.

In the complaint initiating that suit, the County alleged that it was the Trust, not it, that had violated the policy, and that the Trust had done so by denying the County the coverage for which it had contracted. To vindicate its rights, the County requested a declaration, stating that it was "entitled to liability insurance coverage and indemnity with respect to the McCollum action" as well as "a judgment against defendant, LGIT, for all amounts paid in the McCollum [case] covered under the LGIT policy, including post judgment interest and attorneys' fees" and related expenses. Cross motions for summary judgment followed.

Denying the County's motion but granting the Trust's, the circuit court ruled that the County was "not entitled to indemnity" from the Trust because it had "fail[ed] to give" the Trust the notice required by the policy. From that judgment, the County noted this appeal, presenting three issues. Re-ordered, but otherwise presented as they appear in appellant's brief, they are:

I. Whether the trial court erred in finding that the County's claim was barred under the Commercial General Liability Policy because the County failed to comply with notice provisions of the policy.

II. Whether the trial court erred in finding that the underlying claim did not constitute an "Occurrence" under the terms of the Commercial General Liability Policy issued by the Trust to Prince George's County.

III. Whether the trial court erred in failing to find that the underlying claim asserted a claim of "Personal Injury" caused by an "Offense" as defined by the Commercial General Liability Policy issued by LGIT to the County.

Because we conclude that the circuit court was correct in holding that the County's failure to comply with the notice provisions of the parties' policy barred its claim against the Trust, we shall affirm the judgment of the circuit court without reaching issues II and III.

The McCollum Suit

On June 28, 1997, Officer Robert McDaniel, a Prince George's County police officer, attempted to pull over fifty-year-old Freddie McCollum, Jr. for failing to display a tag on the front of his vehicle. It is at this point that the incident, which resulted in McCollum's lawsuit, began, and the parties' agreement as to what occurred ends. At trial, the parties predictably presented two distinctly different versions of what followed.

But, for our purposes, we need not delve deeply into what occurred that day. Suffice it to say that, as a result of the fracas that ensued, McCollum suffered substantial and permanent injuries, including the loss of his right eye. Although ultimately convicted of two minor traffic infractions,³ he was acquitted of the principal charges that were subsequently lodged against him: assault and resisting arrest.

After those criminal proceedings ended, McCollum, his wife, and his daughter brought suit against the County and three County police officers in the United States District Court for the District of Maryland for assault, battery, false arrest, malicious prosecution, and violations of both federal and state civil rights acts. The suit alleged that, when the officers committed the foregoing torts, they were acting within the scope of their employment and that the County was therefore vicariously liable for their acts as well as for negligently hiring and retaining them as police officers.

The jury found in favor of McCollum and awarded him over $4.1 million in damages: $1 for the officers' wrongful entry into McCollum's home, $67,670 for medical expenses, $145,000 for McCollum's lost earning capacity, $3.5 million in non-economic damages, and $400,000 in punitive damages. Granting appellants' request for remittitur, the district court reduced the non-economic damages award from $3.5 million to $1.25 million in damages and the punitive award from $400,000 to $135,000 in damages. When the remittitur was accepted by McCollum, the court entered judgment against the officers and County in the total amount of $1,597,670. From that judgment, the officers and the County noted an appeal to the United States Court of Appeals for the Fourth Circuit. When, in an unreported opinion, the Fourth Circuit affirmed the judgment, see McCollum v. McDaniel, No. 01-1578, 2002 WL 451789 (4th Cir. March 25, 2002), the County paid the judgment and sought indemnification of all monies over $1 million, the amount of its self-insurance.

The Coverage Dispute

From July 1, 1996, through July 1, 1998, the Trust provided the County with excess liability insurance. Under the policy⁴ providing that coverage, the Trust covered the County, which was self-insured for $1 million, with coverage for losses that exceeded the limits of its self-insurance up to $5 million.

The policy provided coverage for four types of liability; only three of which are relevant to this case: Commercial General Liability, Police Legal Liability, and Public Officials Legal Liability. Although the policy provided Police Legal Liability coverage and Public Officials Liability coverage on a "claims-made" basis, its provision of Commercial General Liability coverage was "occurrence-based." That meant that while the Police Legal Liability and Public Officials Legal Liability did not cover claims after the termination of the policy, Commercial General Liability did, provided that the injury occurred before the policy expired.

The policy consisted of three documents: the Declaration Page, the Excess Liability Scope of Coverage ("Scope of Coverage"), and the Self-Insurance Excess Coverage Endorsement ("Endorsement"). Of those three documents, only two are relevant to this controversy: the Scope of Coverage and the Endorsement.

The Scope of Coverage required the County to "see to it that the Trust is notified promptly of an Occurrence, Wrongful Act or Accident, which is likely to create an obligation under this Scope of Coverage." It further required that, "[i]f a Claim is made or Lawsuit is brought against any Insured, the Named Insured must see to it that the Trust receives prompt written notice of the Claim or Lawsuit." And finally, it required the County to, among other things, "immediately" send the Trust "copies of any demands... or legal papers in connection with a Claim or Lawsuit." The Endorsement, on the other hand, required the County to report certain "Losses" within "sixty (60) days" days of learning of them. These "Losses" ranged from specific types of injuries to violations of "federal and Maryland State civil rights statutes."

Although the County never notified the Trust of McCollum's claim or his lawsuit before verdict was rendered, as required by the Scope of Coverage, it did notify the Trust of the verdict or "Loss", as required by the Endorsement. After receiving notice of the claim, the Trust denied coverage and refused to indemnify the County.

Following the Trust's denial of the claim, the County filed suit in the Circuit Court for Prince George's County, alleging breach of contract and seeking a declaratory judgment that the Trust had a duty to reimburse the County for sums paid in excess of $1 million to satisfy the McCollum judgment. Although the County conceded that coverage would not be afforded under the Police Legal Liability or Public Official Liability provisions of the policy, the County maintained that officers' use of excessive force was an "occurrence," and therefore, it was covered under the Commercial General Liability portion of the policy.

At the time the County filed its complaint, it also filed a motion for summary judgment. In response to that motion, the Trust filed a "Motion to Strike or Opposition to Summary Judgment and Cross-Motion for Summary Judgment." Following a hearing on those motions, the circuit court concluded that "[t]he County breached its duty under the policy by failing to give LGIT requisite notice of the claim against the County as provided in the express terms of the policy." Moreover, notwithstanding this breach, the circuit court ruled that McCollum's injuries "were not the result of an occurrence." Therefore, the court found that the claim did not fall within the terms of the Commercial General Liability coverage. Having made those findings, the circuit court concluded that "the County [was] not entitled to indemnity from LGIT under the County's excess claims liability coverage policy for the damages paid by the County in the McCollum suit" and granted summary judgment in favor of the Trust.

Discussion

The County renews the claim that it made below: that the Trust had no right to deny it coverage for failing to comply with what it claims are two different and conflicting notice provisions in the...