Thomas Francis v. Allstate Insurance Company
2013 U.S. App. LEXIS 4640
| 4th Cir. | 2013Background
- Francises sued Allstate in Maryland state court for declaratory judgment on defense/indemnity under a California renters policy.
- Underlying tort action (Walls Towers v. Francises and others) defense progressed; final judgment favorable to Francises on April 6, 2011.
- Policy issued in California covered Danielle Francis; policy delivered to California; choice-of-law provision favors California law unless outside California occurrence governs.
- Allstate removed the action to federal court based on diversity; district court denied remand and granted summary judgment for Allstate.
- Maryland law allows attorney’s fees in declaratory judgment actions, and the district court held total potential fees plus defense costs likely exceeded $75,000, establishing subject-matter jurisdiction.
- Indemnity was not at issue post-removal because the underlying tort action resolved, but the amount-in-controversy analysis included defense-related costs in the declaratory judgment action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal met the amount-in-controversy threshold | Francises: only defense costs in underlying action; declaratory costs not recoverable and should not count. | Allstate: include anticipated fees in declaratory action; total exceeds $75,000. | District court correctly held amount-in-controversy exceeded threshold. |
| What law governs contract interpretation under the policy | Maryland renvoi doctrine should apply; Maryland law governs. | California law applies under policy’s choice-of-law clause. | California law governs contract interpretation due to policy’s choice-of-law provision. |
| Whether renvoi applies to Maryland choice-of-law rules | Limited renvoi should apply to Maryland substantive law. | Renvoi not applicable; lex loci contractus controls under Maryland doctrine. | Renvoi does not apply; lex loci contractus yields California law. |
| Whether Allstate had a duty to defend under California law | Statements about Towers could be covered as an accident under policy. | Under California law, intentional acts are not accidents; no duty to defend. | No duty to defend; statements were deliberate and not an accident under California law. |
| Should Maryland case law allowing attorney’s fees in declaratory actions affect coverage | Fees should not be counted as part of the amount in controversy. | Maryland allows recovery of attorneys’ fees in declaratory actions; fees count toward jurisdictional threshold. | Maryland law permits counting potential fees; fees were properly included. |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (state choice-of-law rules govern; apply the forum's rule)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal courts apply state substantive law in diversity cases)
- De Aguilar v. Boeing Co., 11 F.3d 55 (5th Cir. 1993) (amount in controversy in declaratory actions; preponderance standard)
- Hunt v. Washington State Apple Adver. Comm’n, 432 U.S. 333 (1977) (amount in controversy measured by value of object of litigation)
- McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178 (1936) (jurisdiction tests by value of right to be protected)
- Jackson v. Pasadena Receivables, Inc., 921 A.2d 799 (Md. 2007) (Maryland choice-of-law contracts trump ordinary conflict rules)
- Hogan v. Midland Nat’l Ins. Co., 476 P.2d 825 (Cal. 1970) (definition of accident in California insurance law)
- Mendez v. Merced Mut. Ins. Co., 261 Cal. Rptr. 273 (Cal. Ct. App. 1989) (intentional acts not covered as accidents under policy)
- Allstate Ins. Co. v. Vavasour, 797 F. Supp. 785 (N.D. Cal. 1992) (outlier on accident vs intentional act; Vavasour distinguished)
- Travelers Indem. Co. v. Allied-Signal, Inc., 718 F. Supp. 1252 (D. Md. 1989) (application of contract interpretation rules in declaratory actions)