Republic Franklin Ins. Co. v. Taylor
| Decision Date | 25 March 2022 |
| Docket Number | Civil Action GLR-21-765 |
| Parties | REPUBLIC FRANKLIN INSURANCE COMPANY, et al., Plaintiffs, v. MARCUS EDWARD TAYLOR, II, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
THIS MATTER is before the Court on Defendants Tikia Maria Wilson and Russell Chae Stewart's Motion to Dismiss Plaintiffs' Amended Complaint (ECF No. 24). The Motion is ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2021).[1] For the reasons set forth below, the Court will deny the Motion.
Plaintiffs Republic Franklin Insurance Company (“Republic”) and Graphic Arts Mutual Insurance Company (“Graphic Arts”) (collectively, “Utica”)[2] allege that on or about Sunday, August 9, 2020, Defendant Marcus Edward Taylor, II, an employee of Bancroft Mechanical Contractor, Inc. (“Bancroft”), was operating a 2006 Chevrolet Express G2500 van owned by Bancroft (the “Van”). (Am. Compl. ¶ 10, ECF No. 5). The Van crossed the center line of Steed Road and collided with a vehicle owned by Wilson and operated by Stewart, in which Wilson was a passenger (the “Accident”). (Id. ¶ 12). The collision caused injuries to Wilson and Stewart and property damage to Wilson's vehicle. (Id.). At the time of the Accident, Taylor was subject to an employment agreement with Bancroft under which he agreed that he would not operate company vehicles “for personal reasons during or after business hours” and that “the use of any alcoholic beverages or controlled substances is strictly forbidden.” (Id. ¶ 11). Taylor did not work on the weekends and the accident occurred on a Sunday. (Id. ¶ 13).
At all times relevant to this lawsuit, Republic was the insurer and Graphic Arts was the excess insurer for the Van. (Id. ¶¶ 1-2). Both entities have their principal places of business in New York, and Graphic Arts is incorporated in New York. (Id.). Taylor, Wilson, and Stewart are residents of Prince George's County, Maryland. (Id. ¶¶ 3-5). Utica's policies with Bancroft covering the Van obligate it to pay certain sums owed by its “insured, ” which is defined in relevant part as “[y]ou . . . [or] [a]nyone else while using with your permission a covered ‘auto' you own.” (Id. ¶ 14). Utica asserts that Taylor was not an “insured” at the time of the accident because Taylor was not operating the Van with Bancroft's permission, as he was operating the vehicle outside of business hours and was allegedly impaired at the time of the Accident. (Id. ¶ 16).
On March 25, 2021, Utica filed this lawsuit seeking a declaratory judgment against Defendants Taylor, Wilson, Stewart, Government Employees Insurance Company (“GEICO”), USAA Casualty Company, and USAA General Indemnity Company (together with USAA Casualty Company, “USAA”). (ECF No. 1). On April 16, 2021, before any Defendant filed a responsive pleading in this action, Wilson filed a personal injury lawsuit relating to the Accident in the Circuit Court for Prince George's County, Maryland. See Wilson v. Bancroft Mech. Contractor, Inc., No. CAL-21-4552 (Cir.Ct.Md. filed Apr. 16, 2021).
Utica filed an Amended Complaint on May 10, 2021. (ECF No. 5). The Amended Complaint, which does not contain any formal counts, seeks only a declaratory judgment from this Court that Taylor is not entitled to coverage under the Utica policies for actions arising from the Accident and that Utica therefore has no duty to defend or indemnify Taylor in any such action. (Id. at 7). GEICO filed an Answer on May 13, 2021, (ECF No. 6), and USAA filed its Answer on May 26, 2021, (ECF No. 9).
On July 22, 2021, prior to filing any responsive pleading in this action, Wilson filed a declaratory judgment action of her own in New York state court and notified this Court of her intention to file a motion to dismiss this case as a result. (See ECF No. 15). Having received no response from Stewart or Taylor, Utica moved for Clerk's entry of default as to those Defendants on August 5, 2021. (ECF No. 17). Stewart filed an Answer on August 12, 2021, (ECF No. 18), but hearing no response from Taylor, the Clerk issued an Entry of Default against Taylor and notified Taylor of the default on August 13, 2021, (ECF Nos. 19, 20).
On August 26, 2021, Wilson and Stewart filed the instant Motion to Dismiss Plaintiffs' Amended Complaint (ECF No. 24). On September 15, 2021, Utica, joined by GEICO and USAA, filed an Opposition (ECF No. 28), and on September 30, 2021, Wilson and Stewart filed a Reply (ECF No. 29).
Although neither party specifies the standard of review in their briefs, Wilson and Stewart's Motion is fundamentally a challenge to this Court's jurisdiction to hear this claim under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. (“DJA”). Accordingly, the Court will evaluate Defendants' challenge under Rule 12(b)(1).
Rule 12(b)(1) requires a plaintiff to establish the Court's subject-matter jurisdiction by showing the existence of either a federal question under 28 U.S.C. § 1331 or diversity jurisdiction under 28 U.S.C. § 1332. A plaintiff may establish federal question jurisdiction by asserting a claim that arises from a federal statute or from the United States Constitution. Fed.R.Civ.P. 12(b)(1); 28 U.S.C. § 1331. To show that the claim arises on one of these bases, the federal question must appear “on the face of the plaintiff's properly pleaded complaint.” AES Sparrows Point LNG, LLC v. Smith, 470 F.Supp.2d 586, 592 (D.Md. 2007) (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987)). However, when a party challenges subject-matter jurisdiction, the Court may consider “evidence outside the pleadings” to resolve the challenge. Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).
A defendant challenging a complaint under Rule 12(b)(1) may advance a “facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting ‘that the jurisdictional allegations of the complaint [are] not true.'” Hasley v. Ward Mfg., LLC, No. RDB-13-1607, 2014 WL 3368050, at *1 (D.Md. July 8, 2014) (alteration in original) (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)). When a defendant raises a facial challenge, the Court affords the plaintiff “the same procedural protection as he would receive under a Rule 12(b)(6) consideration.” Kerns, 585 F.3d at 192 (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). As such, the Court takes the facts alleged in the complaint as true and denies the motion if the complaint alleges sufficient facts to invoke subject-matter jurisdiction.
With a factual challenge, like the one advanced by Wilson and Stewart here, the plaintiff bears the burden of proving the facts supporting subject-matter jurisdiction by a preponderance of the evidence. U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009). In determining whether the plaintiff has met this burden, the Court “is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac, 945 F.2d at 768 (citing Adams, 697 F.2d at 1219). Nevertheless, the Court applies “the standard applicable to a motion for summary judgment, under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists.” Id. (citing Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987)). The movant “should prevail only if the material jurisdictional facts are not in dispute and the [movant] is entitled to prevail as a matter of law.” Id. (citing Trentacosta, 813 F.2d at 1558). Unlike under the summary judgment standard, however, the Court is permitted to decide disputed issues of fact, Kerns, 585 F.3d at 192, and weigh the evidence, Adams, 697 F.2d at 1219.
Wilson and Stewart ask the Court to dismiss this declaratory judgment lawsuit in favor of their own declaratory judgment action pending in New York state court, which they argue is the appropriate venue to resolve this dispute. Wilson and Stewart likely presume that a New York court is more likely to apply New York law to this dispute. The applicable law is highly relevant because Maryland and New York courts have adopted differing interpretations of the term “permission” in the context of insurance disputes like this one, i.e., whether Taylor had “permission” to operate the vehicle, notwithstanding the terms of his employment agreement with Bancroft. The New York Court of Appeals, consistent with the majority view, has held that the term “permission” turns not on “whether the driver had permission to use the vehicle for the particular activity at issue, but on whether the driver had permission to use the vehicle at all (i.e. the distinction between a permissive user and a thief).” Carlson v. Am. Int'l Grp., Inc., 89 N.E.3d 490, 498 (N.Y. 2017). Maryland, on the other hand, has adopted the minority view of this question, which is more favorable to insurers such as Utica. See Nat'l Grange Mut. Ins. v. Pinkney, 399 A.2d 877, 879-80 (Md. 1979) ().
As an initial matter, the Court notes that this is a diversity action. (See Am. Compl. ¶ 8). It is axiomatic that federal courts exercising diversity jurisdiction over a matter ...
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