Thе NORTHERN INSURANCE COMPANY OF NEW YORK, Plaintiff-Appellee, v. BALTIMORE BUSINESS COMMUNICATIONS, INCORPORATED, Defendant-Appellant. Complex Insurance Claims Litigation Association, Amicus Supporting Appellee.
No. 02-1358.
United States Court of Appeals, Fourth Circuit.
Argued Feb. 26, 2003. Decided June 19, 2003.
66 Fed. Appx. 414
In this case, the district court specifically accepted the presentence report and stated that it was relying on the report in its sentencing determinations. The report described a total of seven prior cоnvictions that included the crimes of rape and robbery, that were too remote to be included in the computation of Winston‘s criminal history. Our review of the record leads us to conclude that the district court properly explained its determination that Winston‘s criminal history category determined in accordance with the Sentencing Guidelines underrepresented his criminal conduct. Moreover, we agree that the outdated convictions involved serious dissimilar criminal conduct thаt justified an upward departure. The district court therefore did not abuse its discretion in departing upward.
Accordingly, we affirm Winston‘s conviction and sentence. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process.
AFFIRMED.
Before WIDENER, KING, and SHEDD, Circuit Judges.
Vacated and remanded by unpublished PER CURIAM opinion.
OPINION
PER CURIAM:
Northern Insurance Company of New York (“Northern Insurance“) initiated this declaratory judgment action in the District of Maryland, seeking a declaration that it was not obligated to defend and indemnify Baltimore Business Communications, Inc. (“Baltimore Business“) in a class action lawsuit. The district court awarded summary judgment to Northern Insurance, concluding that it was not obliged to defend or indemnify Baltimore Business. Northern Ins. Co. of N.Y. v. Baltimore Business Communications, Inc., MJG-01-2158, Memorandum and Order (D.Md. Feb. 28, 2002) (the “Order“). Baltimore Business has appealed the Order to this Court. Because the district court erred in its award of summary judgment to Northern Insurance, we vacate and remand.
I.
On April 19, 2001, J. Douglas Pinney and Patricia S. Colonell initiated a class action lawsuit in Maryland state court against Baltimore Business and twenty-five other defendants. See Pinnеy v. Nokia, Inc., No. 24-C-01-001897 (Cir. Ct. Baltimore City filed Apr. 19, 2001) (the “Pinney case“).1 The Pinney Complaint (the “Complaint“) alleged that the defendants had manufactured, supplied, sold, and leased wireless handheld telephones (“cell phones“) that emit dangerous levels of radiation. On this basis, the Complaint asserted multiple causes of action, specifically: failure to warn; defective design; violations of the Maryland Consumer Protection Act; breach of implied warranties; negligence; fraud; and civil conspiracy. On eaсh cause of action, the Complaint sought, inter alia, “compensatory damages including but not limited to amounts necessary to purchase a [cell phone] headset for each class member.”2
Pursuant to a series of commercial general liability policies (collectively, the “Policy“)3 that it had purchased from Northern Insurance, Baltimore Business requested that it be defended and indemnified in the Pinney case. Northern Insurance denied this request and, on July 23, 2001, filed this declaratory judgment action, seeking a determination of whether it is obliged to defend and indemnify Baltimore Business in the Pinney case. Baltimore Business counterclaimed against Northern Insurance, seeking damages resulting from its refusal to defend. Both parties then
II.
We review a district court‘s award of summary judgment de novo, viewing the facts and inferences drawn therefrom in the light most favorable to the non-movant. Spriggs v. Diamond Auto Glass, 242 F.3d 179, 183 (4th Cir.2001). Summary judgment is appropriate whеn there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A material fact is one “that might affect the outcome of the suit under the governing law.” Id. at 248. A genuine issue of material fact only arises “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Id.
III.
A.
Before turning to the issues raised in this proceeding, it is important to understand the pertinent legal principles governing an insurer‘s duty, under Maryland law, to defend its insured.4 In Maryland, a court must, in assessing whether an insurer possesses a duty to defend its insured, engage in a two-step inquiry. See St. Paul Fire & Marine Ins. Co. v. Pryseski, 292 Md. 187, 438 A.2d 282, 285-86 (Md.1981). In this inquiry, the court must first determine the extent of insurance coverage by reviewing the policy‘s terms, conditions, and requirements. Id. In making this determination, the court is obliged to construe the insurance policy as it would an ordinary contract, according the policy‘s terms their “usual, ordinary, and accepted meaning,” unless the parties intended otherwise. Dutta v. State Farm Ins. Co., 363 Md. 540, 769 A.2d 948, 957 (Md.2001) (quoting Cheney v. Bell Nat‘l Life Ins. Co., 315 Md. 761, 556 A.2d 1135, 1138 (Md. 1989)).
After identifying the extent of coverage, the court proceeds to the second aspect of the two-step Pryseski inquiry, determining whether the allegations in the underlying proceeding “potentially bring the tort claim within the policy‘s coverage.” Pryseski, 438 A.2d at 285. If such a potentiality exists, the insurer is obliged to defend its insured. To trigger the duty to defend, the underlying complaint must allege a cause of action that is potentially covered by the policy, no matter how “attenuated, frivolоus, or illogical that allegation may be.” Sheets v. Brethren Mut. Ins. Co., 342 Md. 634, 679 A.2d 540, 544 (Md.1996). If a potentiality for coverage exists, the insurer is obliged to defend its insured even though the cause of action cannot possibly succeed, either in law or in fact. Brohawn v. Transamerica Ins. Co., 276 Md. 396, 347 A.2d 842, 850-51 (1975).
Importantly, an insured is entitled to present extrinsic evidence to the court in support of the potentiality of coverage.5
By contrast, if the allegations in an underlying complaint raise the potentiality of coverage, the general rule is that the “insurer may not introduce extrinsic evidence that would take the claim outside the policy‘s coverage.” Baltimore Gas & Elec. Co. v. Commercial Union Ins. Co., 113 Md. App. 540, 688 A.2d 496, 509 (Md.Ct.Spec.App.1997); see also Universal Underwriters Ins. Co. v. Lowe, 135 Md.App. 122, 761 A.2d 997, 1012 (Md.Ct.Spec.App.2000) (stating that insurer “may not use extrinsic evidence to contest coverage under an insurance policy if the tort suit complaint establishes a potentiality of coverage“) (internal quotation marks omitted). The rule against permitting the insurer to utilize extrinsic evidence seems to serve several interests. Most notably, it precludes the insurer from circumventing the potentiality rule by attempting to litigate the merits of an underlying lawsuit in the coverage action; any potentiality for coverage triggers the duty to defend.6
Significantly, Maryland recognizes two limited exceptions to the general rule against an insurer‘s use of extrinsic evidence. Id. at 510-12; Lowe, 761 A.2d at 1012. First, when the underlying tort plaintiff has amended his allegations against the insured, the insurer may utilize the amendments as extrinsic evidence. Baltimore Gas, 688 A.2d at 510. If the amended allegations no longer raise a potentiality for coverage, the insurer no longer has a duty to defend. As a second exсeption to the general rule, a court is not obligated to “turn a blind eye where [it is established] that an insured tortfeasor is excluded from coverage under [the] particular terms of the insurance policy.” Lowe, 761 A.2d at 1012. In other words, an insurer may utilize uncontroverted extrinsic evidence from the underlying lawsuit if such evidence clearly establishes that the suit‘s allegations are beyond the scope of coverage.
Maryland courts have not defined the specific extent to which “extrinsic evidence” may be used in the context of an insurer‘s duty to defend. See, e.g., Chantel Assocs. v. Mount Vernon Fire Ins. Co., 338 Md. 131, 656 A.2d 779, 784 (Md.1995) (merely stating that “appropriate extrinsic evidence” is admissible in duty to defend case). However, answers, affidavits, and depositions appear to constitute permissible “extrinsic evidence.” Lloyd E. Mitchell, Inc. v. Md. Cas. Co., 324 Md. 44, 595 A.2d 469 (Md.1991); see Litz v. State Farm Fire & Cas. Co., 346 Md. 217, 695 A.2d 566, 570-71 (Md.1997).
With these legal principles in mind, we turn to the first step of the Pryseski test, i.e., the identification of the scope of the Policy‘s coverage. Several of the Policy‘s рrovisions are relevant to this issue. Specifically, under the Policy, Northern Insurance agreed that it would “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ ... to which this insurance applies.” See, e.g., J.A. 229 (emphasis added). Further, Northern Insurance possesses the “duty to defend any ‘suit’ seeking those damages.” Id. The Policy limits coverage to situations where a “‘bodily injury’ is caused by an ‘occurrence’ in the ‘coverage territory’ [and] occurs during the policy period.” Id. at 230. An “occurrence” is an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 241. With these Policy provisions in mind, we must assess whether there is a potentiality that the allegations of the Complaint are covered by the Policy.
C.
The Complaint specifically alleged that the defendants, including Baltimore Business, “manufactured, supplied, promoted, sold, leased, and provided service for [cell phones] when they knew or should have known that their products generate and emit radio frequency radiation that causes an adverse cellular reaction and/or cellular dysfunction through its adverse health effect[s]” on the body. Complaint at ¶ 1. It further alleges that the biological injury caused by the cell phones creates an increased health risk that the Pinney defendants (including Baltimore Business) could have eliminated or significantly mitigated by providing cell phone purchasers with headsets and appropriаte warnings. Id. at ¶ 177. For each cause of action arising out of these common factual allegations, the Complaint sought, inter alia, “compensatory damages including but not limited to amounts necessary to purchase a [cell phone] headset ... for each class member.”7 Id. at ¶ 100.
On the basis of its allegations, the Complaint asserts a claim for “damages because of bodily injury,” as contemplated within the terms of the Policy. First, in alleging that persons using cell phones without headsets suffеr from the radiation emitted by such phones, the Complaint alleges a “bodily injury.” The Maryland courts have uniformly held that bodily injuries include those that occur at the minute, cellular level. See, e.g., Chantel Assocs. v. Mt. Vernon Fire Ins. Co., 338 Md. 131, 656 A.2d 779, 884 (Md.1995) (concluding that lead exposure causing direct and indirect damage to cells, tissues, and organs constitutes “bodily injury“); see also Lloyd E. Mitchell, Inc. v. Md. Cas. Co., 324 Md. 44, 595 A.2d 469, 476-78 (Md. 1991) (holding that allegation involving cellular-level bodily changes occurring after asbestos exposure constitutes “bodily injury“). In sum, in сlaiming that the Pinney plaintiffs suffered harm from radiation, the Complaint alleges a “bodily injury,” as contemplated by the Policy.
Second, the allegations of the Complaint are sufficient to claim “damages because of” bodily injury. On this point, Northern Insurance asserts that the Pinney plaintiffs are seeking headsets to repair an alleged defect in Baltimore Business‘s own product and to limit the potential risk of future injury. Thus, according to North-
D.
Northern Insurance asserts that, even if the Complaint triggers its duty to defend, extrinsic evidence clearly shows that the allegations in the Pinney case are beyond the Policy‘s coverage. As mentioned above, under Maryland law, an insurer is entitlеd, in contesting coverage, to utilize extrinsic evidence of: (1) an amendment to the underlying complaint; or (2) uncontroverted evidence that clearly establishes that there is no potentiality for coverage. The first of these exceptions is inapplicable here, because the Complaint has not been amended to eliminate its broad request for compensatory damages. Thus, the only exception possibly applicable here is whether the uncontrovеrted extrinsic evidence establishes that the Pinney plaintiffs are not seeking “damages because of bodily injury.”
In seeking to bring itself within the second exception to the general rule against an insurer‘s use of extrinsic evidence, Northern Insurance points to one of the plaintiff‘s filings in the Pinney case (the “Memorandum“). In that case, the defendants had sought dismissal of the Complaint, asserting, inter alia, that the plaintiffs had failed to allege the existence of a legally cognizable injury. In response, thе Memorandum asserted that the plaintiffs were not seeking to redress any personal injuries resulting from the use of cell phones, stating:
The [defendants] argument is based on the mistaken premise that this case is a personal injury action seeking damages for biological injury which has yet to symptomatically manifest itself. However, [we] are not seeking compensation for any personal injury suffered as a result of the use of cell phones. Rather, [our] pecuniary injuries are limited to the defective product itself. Plaintiffs’ claims for damages relate to the need to repair or replace the portable wireless phones so as to remedy Defendants’ failure to deliver a product that conforms with its contractual warranties and lives up to their representations.
Memorandum at 7. On the basis of this argumentative submission by their counsel, Northern Insurance contends that the Pinney plaintiffs have conceded that they are not seeking “damages because of bоdily injury,” and that the Complaint simply seeks to obtain headsets to cure an allegedly defective product.
Second, if we accepted the Memorandum as binding, we would nonetheless be obliged to read it as a whole, and other statements made therein indicate that the Pinney plaintiffs, while not seeking traditional compensation, are in fact seeking relief designed to address an already existing bodily injury. Indeed, the Memorandum makes it apparent that the Pinney plaintiffs have reasserted the claims for relief made in the Complaint. The Memorandum states: “[t]he complaint seeks a remedy (a headset and appropriate warnings/instructions) designed to eliminate the present and existing biological injury to which the defendants have exposed users of their products and services.” Memorandum at 5 (emphasis added). Examined as a whole, the Memorandum fails to eliminate the potentiality that Baltimore Business could be liable to the Pinney plaintiffs for damages as a result of bodily injury.10 In sum, the Pinney plaintiffs are seeking remedies designed to eliminate already existing bodily injuries. While their
IV.
Pursuant to the foregoing, we vacate the summary judgment award to Northern Insurance, and we remand for such further proceedings as may be appropriate.
VACATED AND REMANDED.
Michael McCOY, Plaintiff-Appellant, v. SHOPPERS FOOD WAREHOUSE, Dеfendant-Appellee, and Warden, Defendant.
No. 03-6167.
United States Court of Appeals, Fourth Circuit.
Submitted June 9, 2003. Decided June 19, 2003.