Springer v. Erie Ins. Exch., 79
Decision Date | 24 June 2014 |
Docket Number | No. 79,79 |
Parties | DAVID SPRINGER v. ERIE INSURANCE EXCHANGE |
Court | Court of Special Appeals of Maryland |
David Springer v. Erie Insurance Exchange, No. 79, Sept. Term 2013, Opinion by Battaglia, J.
To determine if a third party complaint triggers the "business pursuits" exclusion in a homeowner's liability insurance policy, an insurer must consider the continuity of the insured's alleged business interests and the insured's profit motive.
Opinion by Battaglia, J.
This appeal arises out of an action filed in the Circuit Court for Frederick County by David Springer, Appellant, against Erie Insurance Exchange, Appellee ("Erie"), in which Mr. Springer sought declaratory relief and damages for breach of contract, after Erie refused to provide him with a legal defense when he was sued by a third party, J.G. Wentworth Originations, LLC ("J.G. Wentworth"), for, inter alia, defamation and false light.1 Mr. Springer claimed that, under the personal injury liability coverage provisions of his Erie homeowner's insurance policy, Erie had a duty to provide him with a legal defense in the J.G. Wentworth lawsuit. Erie refused and filed a counterclaim for declaratory relief on its own behalf, arguing that the J.G. Wentworth lawsuit was triggered by Mr. Springer's business interests and that his insurance policy included a "business pursuits" exclusion, which specifically barred claims based on the insured's business pursuits.
After the Circuit Court heard oral arguments on cross motions for summary judgment, it issued a declaratory judgment and summary judgment in favor of Erie, declaring, in part, that "Erie Insurance Exchange did not have a duty to defend or indemnify David Springer" and that Erie was not obligated "to pay for the costs of thatdefense or this action." Mr. Springer noted an appeal to the Court of Special Appeals, and before the intermediate appellate court could decide the case, we issued a writ of certiorari on our own initiative, 433 Md. 513, 72 A.3d 172, to consider whether an insurer can rely solely on allegations contained within a complaint filed by a third party when denying an insured's claim for coverage under the insurance policy's "business pursuits" exclusion.2 We shall hold that in order to determine if a third party complaint triggers the "businesspursuits" exclusion in a homeowner's liability insurance policy, an insurer must consider the continuity of the insured's alleged business interests and the insured's profit motive.
J.G. Wentworth brought suit in 2011 against David Springer and the Sovereign Funding Group in the Circuit Court for Frederick County, alleging that they had used two websites, jgw-sucks.com and jgwentworth-scam.com, to spread defamatory and false light information in an attempt to lure customers away from J.G. Wentworth. Mr. Springer then contacted Erie, his insurer, for the first time to request that Erie provide him with a legal defense in the J.G. Wentworth action, because he asserted that, under the terms of his "Ultracover HomeProtector" insurance policy, Erie had a duty to defend him.3 When Erie refused to provide him with a defense, stating that his claim was precluded by, inter alia, the "business pursuits" exclusion in his policy, Mr. Springer retained his own lawyer, thereafter instituting this suit against Erie, in which he sought a declaratory judgment that Erie was obligated to defend him and that Erie had breached its duty by failing to do so.
In his complaint against Erie, Mr. Springer cited numerous provisions of his "Ultracover HomeProtector" insurance policy issued by Erie, effective in July 2009 and renewed annually thereafter. Section II of the policy described the "Home and Family Liability Protection" offered under the policy and explained that "Personal Liability Coverage includes Bodily Injury Liability Coverage, Property Damage Liability Coverageand Personal Injury Liability Coverage." "Personal injury" was defined as:
The policy also contained the following assurance:
Erie defended against Mr. Springer's action, and as its own basis for declaratory relief, argued that Mr. Springer's claim for coverage was precluded by the policy's exclusions, which were detailed in a section of the policy entitled, "What We Do Not Cover--Exclusions." Specifically, the "business pursuits" exclusion provided:
The policy defined "business" as "any full-time, part-time or occasional activity engaged in as a trade, profession or occupation, including farming."
In its counterclaim, Erie also cited another portion of its policy Erie asserted precluded Mr. Springer's claim:
The basis for Mr. Springer's claim, and Erie's claim of exclusion, was the action brought against Mr. Springer by J.G. Wentworth. J.G. Wentworth, a business specializing in purchasing structured settlements and annuities from individuals, sued Mr. Springer and Sovereign Funding Group, a company allegedly specializing in purchasing structured settlements and annuities, in the Circuit Court for Frederick County, alleging that Mr. Springer and the Sovereign Funding Group had engaged in false and misleading advertising in violation of Section 1125 of Title 15 of the United States Code, entitled the "Lanham Act," unfair and deceptive trade practices under Section 13-303 of the Commercial Law Article, Maryland Code (1975, 2013 Repl. Vol.) entitled "Practices generally prohibited" under the Maryland Consumer Protection Act, defamation per se, injurious falsehood,5 false light, tortious interference with prospective business advantage, and tortious interference with contractual relations.
Specifically, J.G. Wentworth alleged in the complaint that Mr. Springer and the Sovereign Funding Group had created, maintained, and publicized two websites that disseminated false and defamatory information regarding J.G. Wentworth, specifically thatMr. Springer and the Sovereign Funding Group had sought, through the websites, "to mislead and misrepresent facts to the public, unfairly and deceptively compete, defame, disparage, and tortuously interfere with the business interests of J.G. Wentworth." The scheme was defined as follows:
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