Friday, March 16, 2007

Bolton Partners Investment Consulting Group, Inc. v. The Travelers Indemnity Company of America (Maryland U.S.D.C.) (Not approved for publication)

Signed March 15, 2007. Memorandum Opinion by Judge Richard D. Bennett (not approved for publication)

In a case arising from the denial of coverage under comprehensive business insurance issued to the parent company of the plaintiff ("Bolton Partners") by the defendant ("Travelers"), and upon consideration of the parties' cross motions for summary judgment, the judge DENIED Bolton Partners' motion for partial summary judgment and GRANTED Travelers' motion for summary judgment.

In the course of providing consulting services to a client, an employee of Bolton Partners made allegedly defamatory statements about one of the companies being evaluated, which resulted in that company filing suit against Bolton Partners. Travelers declined to defend or indemnify under the insurance policy, citing the Designated Personal Services Exception. Bolton Partners eventually settled the suit, and sought indemnification from Travelers in this action.

Upon cross motions for summary judgment, the judge first addressed Travelers' claim that it had no duty to defend because Bolton Partners was not an "insured", since the policy was issued to the parent corporation of Bolton Partners. The judge found the structure of the policy to contemplate coverage of the subsidiary, and also because the issue had not been previously raised by Travelers in declaring its intent not to defend, and Travelers was thus estopped to raise that issue now.

Turning to the professional services exception, the judge noted that, unlike many other states, Maryland does not construe insurance contracts against the drafter, but rather uses normal principles of interpretation. Looking to cases in other jurisdictions, the judge found that such exceptions had been interpreted broadly. Turning to the facts here, the judge found the claimed defamation to have been within the context of Bolton Partners' performance of their professional services. Thus, the suit fit within the Professional Services Exception, and Travelers was not required to defend under its policy. Accordingly, the judge GRANTED Travelers' motion for summary judgment.

The Memorandum Opinion is available in PDF format.

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