WPC s  Xg-lB.:C,# zP΀?8GYCa7=l"Gу+$vZ.YG+7Q|/b%wODDiOcBoB>x61-dl٩pߓM0ĥ pcC}$g`DȺP#g>D><JB1LPR9Հ˫IKW״1}eYuW> vuMkK mɛގ$W7,F 8}'7;+76@_$aWi=4ؓn$F[?h 宲L7WM =mvwKg뎎-fM$o?S1fWt=lgQڝii^y#UNg % 0: 0U 0J 0- 0 0 0j 0 0 0q 0 0 0 0[ 0 0 0P 0 0 0  0 0 0M 0 0 09 0 0c 0) 0<U">R^ w4 mN 00 0-! 0*;" 0'e# 0$$ 0!% 0& 0' 0 ) 1e * 7o* 1u}* 72* 0$+ 0c+ 9, 0~D1 0D12 48:?_AmD#@FcG I9O 1PIQ(S 72S 0w-T 0T 0.U 0U 0V 0IW 0$X 0DY 0NWZ 0Z 0c[ 0>!\ 0_\W] 0_ 0` 0a Bb 0b 0c 0~d 08e 02 f 0 ;#  6      ,maybringatortaction 4 againsttheagentwhohasmadetherepresentationstothebeneficiaryorotherwise   assumedadutyowedtothebeneficiary.Flahertyv.Wineberg,303Md.116,135137   (1985)(agentallegedlymadenegligentmisrepresentationsdirectlytoplaintiff,whowas  theidentifiedthirdpartybeneficiaryoftheagencycontractandwhowasallegedlynot[at  thetimeofthecontract]inanadversarialpositiontotheprincipal,andtheagent  intended?@ ;#  7      ׀thattheplaintiffwouldactupontherepresentation.TheopinioninFlahertyv. l Weinberg,however,clearlyleadstotheconclusionthatthe[Jonesthirdpartyclaimants]  wouldnotbeentitledtobringadirecttortactionagainst[theinsuranceagenttherein].(#(# Jones,supra,at659,n.11. t   TheFlahertyopinioninvolvedamortgageborrowersclaimagainstthemortgagelenders L  settlementattorneyforallegednegligentmisrepresentationoffacts.Discussingthekeyelement 8  asto dutyofcare,theFlahertycourtstated, AlthoughtheFlahertysmayfinditdifficultto $ t supporttheirclaimthatadirectpurposeoftherelationshipbetweenFirstFederalandWeinberg  ` wastobenefittheFlahertys,theyneverthelesshaveallegedthis...factandsuchallegationis  L  enoughtosurvivethedemurrer.=@ ;#  8      ׀  8    Jones,infactualcontrasttoFlaherty,couldnotallegesuchadirectpurposeoranydirect $  contactwiththeinsurerastheJoneseswerecompletestrangerstothepartiestotheinsurance   contractpriortotheirautomobileaccident.TheJoneses,thus,werepotentialthirdpartycontract   beneficiaries,ratherthanidentifiedthirdpartycontractbeneficiaries.Cf.,Jones,at658659,   suggestingthat identifiedthirdpartybeneficiarieshaveagreaterclaimonthe intimatenexus   neededtoprocuretortliability. p   SubsequenttoJones,theMarylandCourtofAppealsagainconsideredthetortliabilityto \ thirdpartyplaintiffsinWalpert,Smullian&Blumenthal,PAv.Katz,361Md.645(2000). H ReviewingJones,theCourtthensummarizeditsholdingontheissueasfollows: 4 0  Allthatisrequiredisthatthetrieroffactcouldfindthattheevidencesufficestoapprise  \ thedefendantof...thepurposeforwhichitsworkistobeused,whoisintendedatthe H timeoftheengagementtouseitforthatpurpose,seeJonesv.HyattIns.Agency,356Md. 4 639,658659...(1999)andsomeconnectionwiththatpartythatistheequivalentof   privity,suchasknowledgeofthatpartysreliance. (#(# Walpert,at693.  Ї  Walpertinvolvedaclaimofnegligentmisrepresentationinanaccountantsreporttohis  client;however,theaccountanttheredirectlycommunicatedanddeliveredacopyofthereportto  thethirdpartyplaintiffs.Id.,at694.Inaconcurringopinion@ ;#  9      ,JudgeWilneropinedthatthe  Restatement(2nd)ofTortsrulemightaswellhavebeenadoptedformallybytheappellatecourt, t providingprofessionalliabilityonlytothe client...andtothosethirdpartiestowhomthe ` accountanteitherintendstosupplytheinformationoractuallyknowstheclientintendstosupply L  it.Id.,at694695. 8    Inthepresentcase,PlaintiffssuccessfullyarguedtothejurythatStateAutoactuallyknew $ t MonaintendedtosupplytheallegedlymisleadinginformationtoPlaintiffs.  ` 4.Declaratoryjudgment  8    Consistentwiththejury'sverdict,thisCourtnowproceedstoprovidedeclaratoryreliefas   requestedbyPlaintiffsandasallowedbyMarylandCode,CourtsandJudicialProceedings   Article,3401,etseq.,construingtheinsurancepolicyAT ;#  10      ׀( thepolicy)herein."XXXXhTherelief   Plaintiffsexpresslyhaverequestedinthiscountisadeclarationthat:   0  StateAuto...hasadutytocompensateDavisasathirdpartybeneficiaryunderthe \ policiesinsurance[it]issuedtoMonaBuilders.Davisrequestssuchotherandfurther H reliefastheCourtdeemsnecessaryandproper,includingbutnotlimitedto, 4 reimbursementofattorneysfeesrespondingtotheComplaintforDeclaratoryJudgment  p thatStateAuto[filed]andthenvoluntarilydismissed.#XhXX"XyS#"XXXXh \(#(# " X"X#  "!V#"  7 ?+ ` hp x X?  S747V  #"XX "`V##XhXX"XV#  Initially,theCourtnotesthatStateAutoarguedattheconclusionofthetrial:a)thatthe 7 declaratoryreliefshouldbeconsideredmootinlightofitspriorsettlementwiththeinsuredand #s ofthejury'sresolutionofplaintiffs'claimsherein;b)thattheconstructiondefectshereinwerenot _ an accidentor occurrenceasinsuredundertheCGLpolicy;andc)thatnoactionsbyState K AutocausedanybodilyinjurytoPlaintiffs.7V>W݌ 7 Ќ XX    ! A.Mootness      Onthequestionofmootness,thisCourtsharestheconcernofStateAutothat,ordinarily,  aplaintiffisexpectedtobringallrelatedclaimstocourtatonceand,absentsufficient t explanation,possiblymaybeestoppedfromlaterlitigationoftherelatedmatters.E ;#  11      ׀ `   However,onepossiblejustificationmaybedelayeddiscoveryoflatentinjury.E.g.,Harig L  v.JohnsManvilleProductsCorp.,284Md.70(1984).Plaintiffscounsel,attrial,profferedthat 8  bodilyinjuriessufferedbyMs.DavisandtheDavischildren,asallergicreactionstotoxicmold, $ t constitutesuchlatentinjuries.  `   RecognizingthelegislativepolicythattheMarylandUniformDeclaratoryJudgmentAct  L  istobe liberallyconstruedandadministered,thisCourtproceedstoconsiderthematteronthe  8  basisthattheclaimarguablymaynotbemoot.MarylandCode,CourtsandJudicialProceedings $  Art.,3402.   B.CGLprovisionsasto occurrenceand accident     Attheheartofthedeclaratoryjudgmentactionisthequestionofwhetherthepolicys p definitionof occurrenceshouldcoverPlaintiffsclaims.Duringthecourseofthetrial,this \ Courtdeterminedthat,asamatteroflaw,thepolicytermsonthisquestionwereambiguous. H Thekeyexcerptsfromthepolicyfollow: 4   0 ` 1.a. Wewillpaythosesumstheinsuredbecomeslegallyobligatedtopayas  p damagesbecauseofbodilyinjuryorpropertydamagetowhichthis ` insuranceapplies.. .L` (#` (#   0 ` b.Thisinsuranceappliesto bodilyinjuryand propertydamageonlyif:<` (#` (# 0  0` (#(#(1) The bodilyinjuryor propertydamageiscausedbyan occurrence  ( thattakesplaceinthe coverageterritory;and` (#` (#    ` (2)The bodilyinjuryor propertydamageoccursduringthepolicyperiod.    0  0` (#(#2.Exclusions` (#` (# 0  0` (#(# Thisinsurancedoesnotapplyto :` (#` (# 0  0` (#(#l.Damagetoyourwork` (#` (# 0  0` (#(# Propertydamageto yourworkarisingoutofitoranypartof itand x includedinthe productscompletedoperationshazardh` (#` (# 0  0` (#(# Thisexclusiondoesnotapplyifthedamagedworkortheworkoutofwhich T  thedamageariseswasperformedonyourbehalfbyasubcontractor. @ ` (#` (#   0 `  Occurrence meansan accident ,includingcontinuousorrepeatedexposureto  h substantiallythesamegeneralharmfulconditions.CGL,page12,sec.IV. X ` (#` (#   0 `  Yourproduct means[a]nygoodsorproducts,otherthanrealproperty, 0  manufactured,sold,handled,distributedordisposedofby:[y]ou;[o]therstrading   underyourname;or[a]personororganizationwhosebusinessorassetsyouhave   acquired;and[c]ontainers,materials,partsorequipmentfurnishedinconnection   withsuchgoodsorproducts.Yourproductincludes[w]arrantiesor   representationsmadeatanytimewithrespecttothefitness,quality,durability,  performanceoruseofyourproduct;and[t]heprovidingoforfailuretoprovide l warningsorinstructions.CGLpage13,sec.IV,para.20X` (#` (# 0  0` (#(#  Thisinsurancedoesnotapplytopropertydamageto[t]hatparticularpart 0 ofrealpropertyonwhichyouoranycontractorsorsubcontractors working  p directlyorindirectlyonyourbehalfareperformingoperations,iftheproperty ` damagearisesoutofthoseoperations.CGLpage4,sec.I,para.JL` (#` (#   0 ` Thisinsurancedoesnotapplyto:[p]ropertydamagetoyourworkarisingout $ ofitoranypartofitandincludedintheproductscompletedoperationshazard.   Thisexclusiondoesnotapplyifthedamagedwork ortheworkoutofwhich  thedamagearises wasperformedonyourbehalfbyasubcontractor .CGL  page4,sec.1,para.l.` (#` (#   Emphasisadded. x    Basedontheaboveprovisionsasto theinsured,thisCourtfindsthatPlaintiffswere P"  contractuallythirdpartybeneficiariesoftheCGLinsurancecontract.Initially,theywerewithin <#! theclassofunidentifiedpotentialthirdpartybeneficiaries;subsequently,whenStateAutos ($x" agentpreparedthecertificatesofinsurancespecifyingPlaintiffsandtheirresidentialconstruction %d # project,theybecameidentifiedpotentialthirdpartybeneficiaries. &P!$   Also,basedontheabovepolicyprovisions,thisCourtinstructedthejuryasfollows: &<"% 0   ` Aninsurancepolicyistobeinterpretedwiththewordsandtermsgiventheir ($' customaryandusualmeanings.Whentermsareambiguous,youmustconsidertheother )%(  evidenceandtestimonyinthiscaseconcerningtheintentionoftheparties.Iftheterms *%) arestillambiguous,thelanguageinthepolicymustbeinterpretedagainsttheinsurance  company."XXXXh(#(#  0   ` #XhXX"XFt#<( 4 <DLX<-  Inthepresentcase,theoriginalinsurancepolicy(exhibitE7/15/997/15/00)  providedcoverageforpropertydamagearisingfromanoccurrence,whichisdefinedas t anaccidentincludingcontinuousorrepeatedexposuretosubstantiallythesameharmful ` conditions."XXXXh#XhXX"Xtv#ԀCGL,page12,para.13L (#(# 0   ` However,anambiguityiscreatedastotheexclusionofsubcontractorswork 8  becausesubsequentpolicyprovisionsstatesthatthepropertydamageexclusiondoesnot $ t apply ifthedamagedworkortheworkoutofwhichthedamageariseswasperformed  ` onyour[theinsuredsMonaBuilders]behalfbyasubcontractor.CGL,page4,para.  L  l. 8 (#(#   Accordingly,thejurywasinstructedtodecidewhethertherewassufficientevidenceto $  persuadeitthattherewascoverageof"propertydamage"underthepolicyduringtheperiodin   question.     Thejuryhadheardevidence,interalios,thatoneofStateAutosseniorclaims   examiners(BruceFisher)testifiedathisdepositionthattherecouldhavebeencoveragefor    resultingdamagefromsubcontractorsworkandthata toxicmoldclaimwouldhavebeen p coveredatthattimebytheCGLpolicy.F ;#  12      ׀FishercalledtheinterpretationoftheseCGLterms a \ murkyarea andrecountedhowhehadconsultedbyemailwithhisownsupervisor(regional H administratorWilliamMasterson)aboutthem.Fisheralsostatedthat 99%ofthetime,[State 4 Autowoulddenyall]coverageofclaimsinvolvinggeneralcontractorsbuildinghomes.Indeed,  p basedontheinstructionsofhisregionalsupervisor,FisherpromptlydiddenytheMona/Davis  \ claimwithoutconductinganysubstantialinvestigationoftheclaim. H   ThisevidenceexceedsthatconsideredinMarylandprecedentsinwhichplaintiffs 4 complainedofbadfaithornegligentdenialsofcoverage.Inthepresentcase,Plaintiffsoffered   evidencethattheinsurersimultaneouslyarranged:1)tomaintainastandardCGLpolicywith   termswhichdeliberatelywereambiguous,soas2)tobeableonthisbasistodeny99%ofall  residentialconstructionclaims,but3)topermitinsuranceagents,suchasSanders,torepeatedly  issuecertificatesofinsurance,representingtothirdpartiesthattherewouldbeCGLcoveragefor  residentialconstructionprojects.Together,theseconflictinginterpretationsoftheCGLpolicy l fordifferentpurposesmaybeunderstoodasconstitutingintentionaloratleastnegligent X  misrepresentationtothethirdpartybeneficiaries(aswellaspotentiallyinsuredsandlenders), D! whoreceiveandrelyuponthecertificationsastoinsurance. 0"    ConsideringalltheevidenceandtheCourtsinstructions,thejurysverdicton #l! constructionoftheinsurancepolicywasthat StateAutoscommercialgeneralliabilitycoverage $X" forMona...includedpropertydamagewhichresultedfromanynegligentactsofMonas $D # subcontractors.Hh ;#  13      ׀ThejuryalsofoundthatStateAutohad misrepresentedamaterialfactasto %0!$ thecommercialgeneralliabilitycoverage.Thelatterfindingofmisrepresentation,asarguedby  Plaintiffscounsel,effectivelywasbasedonStateAutoscertificationthattherewascoveragefor  residentialconstruction,despiteacompanypolicytoconstruetheambiguouspolicyprovisions  sothat, 99%ofthetime,suchcoveragewouldbedenied. t   Consistentwiththejurysverdict,theCourtintheseparateorderattachedwilldeclare ` thattheambiguousprovisionsofthe_ CGL_ Ԁpolicyhereinproperlymustbeinterpretedtoprovide L  coverageforthePlaintiffspropertydamagesandanybodilyinjuriesas resultingdamagefrom 8  thesubcontractorsunintendedfaultywork. $ t C.Bodilyinjuryliability  L    StateAutoarguesthatitshouldnotbeliableforbodilyinjuriesbecause1)Plaintiffswere $  notthenamed insuredand2),asthirdpartyclaimants,cannotclaimdirectcausationofbodily   injuriesbyStateAuto.Specifically,StateAutopointstotheCourtofAppealsdiscussionin   Jones,supra,at658,thePlaintiffs   0  personalinjuriesdidnotresultfrom[theinsurers]negligencebutwerecausedbythe p negligenceof[theinsureds]employee.Theonlyinjurypossiblyincurredbythe \ [Plaintiffs]asaresultof[theinsurers]negligenceisthattheirjudgmentagainst[the H insured]maynotbesatisfied....Thisiseconomiclossonly.4(#(#   Bythesamelogicalanalysisthattheinsurersnegligencecouldnot causebodilyinjury,  \ theinsurersmisrepresentationcouldnotcause direct economiclossIT ;#  14      ׀either."XXXXhԀ#XhXX"Xg#"XXXXhԀYet,applyingthe H legalanalysesofMarylandsCourtofAppealsin_ Walpert_ ,_ Flaherty_ ,andJonesasdiscussed 8 above,thisCourtfindsPlaintiffsshouldbepermittedtorecoverforbodilyinjuryclaimwhich $ theyreleased,duetotheimproperdenialoftheirclaims,tothesameextentthattheymayrecover  forpropertydamage.    #XhXX"X#ԀUnliketheplaintiffsinJones,Plaintiffsheredidprovideevidencethattheyhada  substantialbasisfortheirbeliefthat,absentasubstantialcompromiseorinsuranceprovidedby  StateAuto,Monawouldlacktheassetstosatisfytheirclaimandprobablywouldfilefor p bankruptcy.Cf.,Jones,supra,atfootnote10.Asdeterminedbythejury,StateAutosfalse \  representationsastotheinsurancecoverageforMonadamagedPlaintiffs,causingthemto H! compromiseandsettletheirclaimsforsubstantiallylessthantheymighthavesoughtotherwise."XXXXh 4"    Thedecisiveissueisnot whatisthenatureoftheirclaimsolongasitcouldhavebeen  #p! coveredunderthepolicy.Rather,thedecisiveissueis whethertheywerepersonsidentifiedto  $\" theinsureraspersonstowhomtherepresentationsofinsurancewouldbesuppliedandwhowere $H # likelytorelyontheserepresentations.HavingresolvedthisissueinPlaintiffsfavor,basedon  theforegoingdiscussion,theCourtwillnotrepeatthereasonshere.  D.Attorneysfeesandcosts t   Plaintiffsarenotentitledtoseekcounselfeesundertheauthorityofthedeclaratory L  judgmentstatute.Md.Code,Courtsand_ Jud_ .Proc.Art.,3412;CityofNewCarrolltonv. 8  _ Belsinger_ ԀSigns,266Md.229(1972). $ t  G8KLMNOPQR($x35  Orally,PlaintiffscounselarguedthatthebasisforsuchanawardshouldbeMaryland  ` Rule1341asthejury,ineffect,hadfound badfaithbyitsverdict.ThisCourtagreesthatthe  L  verdict,ineffect,representssuchafinding.  8    However,theawardofcounselfeesisdiscretionaryandnotautomatic.TheCourttakes $  notethat,inhisargumenttothejuryforpunitivedamages,Plaintiffscounselsuggestedthatthe   jurycouldconsiderthefactsastothetime,expense,andlegalcoststhatPlaintiffsincurredasa   resultofStateAutosintentionalmisrepresentationanditsimproperrefusaltopayvalidclaims.   Thejury,apparentlytakingtheseargumentstoheart,awarded$500,000punitivedamages.     Consideringthisaward,thisCourtinitsdiscretionfindsthatitisnotappropriateto p provideanawardofcounselfeesandcostsunderRule1341#XhXX"X#"XXXXhԀorassupplementaryreliefunder \ CourtsArticle,3410or3412.CenturyICondominiumv.PlazaCondominium,64Md.App. H 107(1985). 4   AseparateOrderprovidingfordeclaratoryjudgmentandentryofafinaljudgment  \ consistentwiththejurysverdictisattached.#XhXX"X#"XXXXh H      `     h   #XhXX"X^#__________________________________      `     h   PhilipT._ Caroom_       `     h   JUDGE"XXXXhԀ  cc:  C.EdwardHartman,III,Esq    HerbertR._ O'Conor_ ,Esq.    MaryC.Baldwin,Esq.#XhXX"X!#"XXXXh l #XhXX"XG#  X  8hXXdXXd8  INTHECIRCUITCOURTFORANNEARUNDELCOUNTY   ROBERTDAVIS&JUNEDAVIS      ` Plaintiffs   h   * x v. d   р    h   *No.C200386729 <   STATEAUTOPROPERTY& ( x   CASUALTYINSURANCECO.,etal.   d   р   ` Defendants h   *    XXh"    P     @  @  @N #"XX "X#ORDERPROVIDINGDECLARATORYJUDGMENT    @  @  @N AND#XhXX"Xw#ԀENTRYOFFINALJUDGMENTINACCORDANCE    @  @  @N  @ WITHJURYSVERDICT     Forthereasonsstatedintheforegoingopinion,basedonthemeritstrialandthejurys ^  verdictherein,itherebyisbytheAnneArundelCountyCircuitCourt,onthis____dayof  December,2004, "r   DECLAREDthatPlaintiffsRobertDavisandJuneDaviswerethirdpartybeneficiariesof  thecommercialgeneralliabilityinsurancepolicyissuedbyStateAutoProperty&Casualty 6 InsuranceCompany( StateAuto)to"XXXXhMonaBuilders&Developers,Inc#XhXX"Xc#Ԁ( Mona);anditis H further    DECLAREDthatsaidinsurancepolicyprovidedcoverageforany resultingdamage  \ and bodilyinjuryfrom accidentsincludingunintendedfaultyworkbysubcontractorsof n Mona;anditisfurther;  !   ORDEREDthatfinaljudgmentshallbeenteredbytheClerkoftheCourtonthisdatein 2 # favorofRobertDavisandJuneDavisandagainstStateAutointheamountsof$524,727 !% compensatorydamages,plus$500,000punitivedamages,plus10%judgmentinterest;anditis "F' further X$)   ORDEREDthattherequestofPlaintiffsforattorneysfeesandcosts,andanyother % !+ requestforreliefstilloutstandingherebyisdenied.   p      x  'l"-      `     h   _________________________________ ~(#/    `     h   PhilipT.Caroom j)$0    `     h   JUDGE V*%1 cc:  C.EdwardHartman,III,Esq B+&2   HerbertR.O'Conor,Esq. .,~'3   MaryC.Baldwin,Esq."XXXXhԀ#XhXX"X#