Springer v. Erie Insurance Exchange
94 A.3d 75
Md.2014Background
- David Springer sued Erie Insurance Exchange for declaratory relief and defense costs, arguing coverage for a J.G. Wentworth defamation suit under his homeowner policy.
- Erie denied defense under the policy’s business pursuits exclusion, asserting the J.G. Wentworth action arose from Springer’s business activities.
- The underlying J.G. Wentworth complaint alleged Springer’s and Sovereign Funding Group’s involvement in defaming Wentworth via websites; it also alleged that Springer was CEO of Sovereign Funding Group.
- The circuit court granted summary and declaratory judgments in Erie’s favor, finding the suit excluded by the business pursuits clause and that Springer’s acts arose from business pursuits.
- This Court granted certiorari to determine whether a third-party complaint alone suffices to trigger the business pursuits exclusion and held that continuity of business interests and profit motive must be considered.
- The court remanded for further proceedings to assess Springer’s continuity of interests and any profit motive at the time of the alleged defamatory conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a third-party complaint alone trigger the business pursuits exclusion? | Springer: no; need continuity and motive. | Erie: yes; allegations suffice. | No; require continuity and motive to trigger exclusion. |
| Must continuity and profit motive be considered to apply the exclusion? | Springer: yes, using Appleman factors. | Erie: the policy language controls without extrinsic factors. | Yes; both continuity and profit motive required. |
| Should the court rely only on the face of the third-party complaint for coverage? | Springer: face-alone analysis is insufficient. | Erie: face of complaint may determine coverage. | Face-alone is insufficient; need context/evidence. |
| What standard governs review of a declaratory judgment paired with summary judgment? | Standard Fire and related cases require liberal defense construction. | Court should apply de novo review of legal questions. | De novo review; determine legal correctness. |
Key Cases Cited
- Northern Assurance Co. of America v. EDP Floors, Inc., 311 Md. 217 (Md. 1987) (arising out of broad definition guides exclusions)
- Zurich Ins. Co. v. Friedlander, 261 Md. 612 (Md. 1971) (broadly interpreted arising out of to include causal connection)
- Mass Transit Admin. v. CSX Transp., Inc., 349 Md. 299 (Md. 1998) (interprets arising out of in indemnity context)
- Brohawn v. Transamerica Ins. Co., 276 Md. 396 (Md. 1975) (duty to defend broader than surface allegations; policy interpretation framework)
- Pryseski v. St. Paul Fire & Marine Ins. Co., 292 Md. 187 (Md. 1981) (duty to defend; two-part inquiry; relate to policy and tort allegations)