James G. Davis Construction Corp. v. Erie Insurance Exchange
126 A.3d 753
Md. Ct. Spec. App.2015Background
- Davis subcontracted drywall/insulation work to Tricon for a DC project; indemnity clause required Tricon to indemnify Davis and name Davis as an additional insured on a policy issued by Erie.
- Certificate of liability insurance showed Davis as additional insured on Erie’s policy, but the certificate was issued by an independent broker and stated it did not amend or extend coverage.
- Policy Additional Insured Endorsement (ISO 2004 form) on the Tricon policy provided broader terms than the certificate, covering Davis for bodily injury, property damage, or personal and advertising injury caused in whole or in part by Tricon or those acting on Tricon’s behalf.
- Frost Fire employees were injured on Tricon’s scaffold at the Project; Frost Fire filed suit in Prince George’s County alleging negligence by Tricon and Davis.
- Davis informed Erie of the claim and tendered defense; Erie declined, arguing no duty to defend Davis as an additional insured; Davis sued Erie in Montgomery County for breach of contract and related relief.
- The circuit court granted Erie summary judgment, finding no duty to defend Davis; the Maryland Court of Special Appeals reversed and remanded, holding the Policy’s terms (not the certificate) created a duty to defend because Davis’s alleged liability could be caused in whole or in part by Tricon’s ongoing operations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Erie had a duty to defend Davis as an additional insured under the Policy. | Davis contends the Policy Additional Insured Endorsement covers liability caused, in whole or in part, by Tricon’s acts, triggering Erie’s duty to defend. | Erie argues the endorsement language limits coverage to vicarious liability or to claims not supported by the Policy’s terms, and the Certificate Endorsement is not binding. | Yes; Erie has a duty to defend under the Policy’s terms, not the Certificate Endorsement; the court erred in focusing only on the certificate. |
Key Cases Cited
- Aetna Cas. & Sur. Co. v. Cochran, 337 Md. 98 (1995) (duty to defend standard and coverage analysis in Maryland)
- Brohawn v. Transamerica Ins. Co., 276 Md. 396 (1975) (duty to defend when potentiality of coverage exists; resolve in insured’s favor)
- D’Aoust v. Diamond, 424 Md. 549 (2012) (summary judgment standard; independent record review required)
- Sheets v. Brethren Mut. Ins. Co., 342 Md. 634 (1996) (policy interpretation and potentiality of coverage in tort suits)
- Capital City Real Estate, LLC v. Certain Underwriters at Lloyd’s London, 788 F.3d 375 (4th Cir. 2015) (interprets ‘caused, in whole or in part, by’ language in an additional insured endorsement)