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Decided: June 10, 2015

The Fourth Circuit vacated and remanded the lower court, finding that a general contractor is covered where the subcontractor, as the named insured, was partially negligent and that the allegations in the tort actions potentially brought the claim within the coverage of the policy.  

This appeal stems from Plaintiff, operating as a general contractor for the renovation of a building, subcontracting foundation, structure, and underpinning work to Marquez Brick Work, Inc (“Marquez”).  The subcontract required Marquez to indemnify the Plaintiff for any damages caused by its work and also required that Marquez maintain liability insurance with Plaintiff named as additional insured.  The Defendant issued an insurance policy to Marquez with Plaintiff listed as an additional insured.  During the course of the work, a wall collapsed and ultimately Plaintiff made a claim against Marquez.  The Defendant insurance company denied coverage and the Plaintiff filed an action for declaratory judgment against Defendant.  The district court granted summary judgment to the Defendant, and the Plaintiff appeals.  

Maryland courts ask, when determining if an insurer has a duty to defend the insured, (1) what is the coverage and what are the defenses under the terms and requirements of the insurance policy, and (2) do the allegations in the tort action potentially bring the tort claim within the policy’s coverage.  St. Paul Fire & Marine Ins. Co. v. Pryseski, 438 A.2d 282, 285 (Md. 1981). The Defendant sought to limit liability based on a theory of vicarious liability.  The Court ultimately held that the language of the insurance contract must control, and the language lacked vicarious liability limitations and, therefore, the first element of the Maryland test was satisfied.  Having determined the scope of the policy, the Fourth Circuit then examined the second step of the Pryseski analysis.  The Court noted that the underlying Complaint faulted the Defendants for improperly excavating and supporting and for failing “to comply with the applicable standard of care while performing said renovations.”  Therefore, the Fourth Circuit found that there was a potentiality for coverage and that the Defendant had a duty to defend the Plaintiff in the underlying tort claim.

Full Opinion

William H. Yarborough