Francis v. Allstate Insurance
869 F. Supp. 2d 663
D. Maryland2012Background
- Thomas Francis (MD citizen) and Danielle Francis (CA citizen) seek a declaratory judgment that Allstate must defend them in a Maryland tort action.
- Allstate issued a California-delivered renter’s policy that defines bodily injury, property damage, and an occurrence, with a California choice-of-law clause but with an exception tied to where the occurrence happens.
- Towers, in March 2008, sued the Francises in Frederick County Circuit Court for defamation, false light invasion of privacy, malicious prosecution, civil conspiracy, and intentional infliction of emotional distress.
- The underlying Towers action alleged false statements about Towers and was resolved against the Plaintiffs; the plaintiffs spent $66,347 defending Towers’s suit.
- Allstate removed the declaratory action to federal court in March 2011; Plaintiffs argued removal was untimely and contested jurisdiction.
- The court ultimately holds subject matter jurisdiction existed at removal, deducts potential indemnity from consideration, but includes Plaintiffs’ anticipated attorney’s fees in this action to meet the $75,000 threshold.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction at removal | Amount in controversy under $75,000; no indemnity or fees counted. | Indemnity in Towers action and Plaintiffs’ fees in this action push over $75,000. | Diversity jurisdiction existed; include fees, exclude indemnity. |
| Choice of law governing duty to defend | Maryland law should apply to duties under the policy. | California law governs contract interpretation; Maryland law for tort aspects if applicable. | California contract law governs; Maryland tort law applies to duty to defend under facts. |
| Whether Towers’s complaint alleged an accident triggering duty to defend | Defamation can be negligent; could trigger duty. | Defamation is an intentional tort, not an accident. | Defamation is an intentional act; no accident; no duty to defend. |
Key Cases Cited
- Allstate Ins. Co. v. Campbell, 334 Md. 381, 639 A.2d 652 (Md. 1994) (attorney’s fees recoverable when insurer breaches defense duty)
- Merced Mut. Ins. Co. v. Mendez, 213 Cal.App.3d 41, 261 Cal.Rptr.273 (Cal. Ct. App. 1989) (defamation considered intentional; no accident; duty to defend analysis)
- LaPore v. Allstate Ins. Co., 762 F.Supp.268 (N.D. Cal. 1991) (defamation not accident; duty to defend depends on accident status)
- Merced Mut. Ins. Co. v. LaPore, 897 F.2d 3? (incorrect placeholder, see above) (Cal. 1991) (note: placeholder in line with content; not used in final)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (choice-of-law recognizing substantial relationship analysis)