Silver v. American Safety Indemnity Company
31 F. Supp. 3d 140
D.D.C.2014Background
- Silver sues American Safety for breach of contract and bad faith/fair dealing over defense-cost coverage under a Federal Employee Professional Liability Policy.
- Policy II provides Administrative and Criminal Legal Defense Coverage; coverage ends when Insured Member ceases federal employment (Condition B).
- Plaintiff resigned from federal service in Oct 2011; investigations into Solyndra began Nov 2011; policy period March 2011–March 2012.
- American Safety denied coverage, contending Insured Member status ended October 2011, before investigations began.
- Court analyzes choice-of-law (DC law) and interprets the policy terms; grants judgment on the pleadings for defendant on count I and dismisses count II as moot or unsupported.
- Cross-motion for partial summary judgment is denied as moot after ruling on the pleadings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section II coverage ends when the Insured Member leaves federal service. | Silver argues Condition B allows continued coverage. | American Safety contends coverage ends upon resignation. | Section II coverage ends at resignation; no coverage for post-resignation investigations. |
| Whether the Insured Member definition creates ambiguity for Section II. | Definition allegedly inconsistent with other provisions. | Definition clear; applies to Section II; no ambiguity. | Definition unambiguous; no ambiguity to extend coverage. |
| Whether bad faith/breach of duty of fair dealing survives where contract is resolved against plaintiff. | Bad faith claim potentially viable if coverage existed. | No coverage, so no bad-faith claim. | Bad faith claim dismissed because contract coverage did not exist. |
Key Cases Cited
- Cameron v. USAA Prop. & Cas. Ins. Co., 733 A.2d 965 (D.C. 1999) (contract interpretation governs policy terms when unambiguous)
- Nat’l R.R. Passenger Corp. v. Lexington Ins. Co., 445 F. Supp. 2d 37 (D.D.C. 2006) (interpretation of policy language in context of DC law)
- 1010 Potomac Assocs. v. Grocery Mfrs. of America, 485 A.2d 199 (D.C. 1996) (interpretation of contract as a whole; avoid meaningless terms)
- Chase v. State Farm Fire & Cas. Co., 780 A.2d 1123 (D.C. 2001) (reasonable expectations doctrine; limits of exclusionary language)
- Capitol Specialty Ins. Corp. v. Sanford Wittels & Heisler LLP, 793 F. Supp. 2d 399 (D.D.C. 2011) (enforcement of unambiguous policy terms; not rewriting contracts)