Preview:

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND BOLTON PARTNERS INVESTMENT CONSULTING GROUP, INC., Plaintiff, * v. * THE TRAVELERS INDEMNITY COMPANY OF AMERICA, Defendant. * * * * * * * * * * * MEMORANDUM OPINION * * * * Civil Action No.: RDB-05-2724 * *

This action arises out of a comprehensive business insurance policy purchased by the Plaintiff Bolton Partners Investment Consulting Group, Inc. ("Bolton Partners" or "Plaintiff") from The Travelers Indemnity Company of America ("Travelers" or "Defendant"). Bolton Partners alleges that Travelers breached its insurance contract when it failed to provide insurance coverage and defend it in a Virginia lawsuit. The three-count Complaint seeks damages for breach of contract and breach of fiduciary duty and requests a declaratory judgment that the insurance policy in question provided coverage to the Plaintiff and that the Defendant owed a duty to defend the Plaintiff under the insurance policy. Pending before this Court are the parties' cross-motions for summary judgment. The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2004). For the reasons stated below, the Plaintiff's Motion for Partial Summary Judgment on Liability is DENIED, and the Defendant's Motion for Summary Judgment is GRANTED. BACKGROUND & PROCEDURAL HISTORY On January 22, 2002, Bolton Offutt Donovan Inc. ("Bolton Offutt") purchased a

comprehensive insurance policy ("the Policy") from the Travelers Indemnity Company of America ("Travelers") for the year 2002, numbered 680-585H5250-TIA-02. (See Pl.'s Mem. Supp. Summ. J. Ex. 2 [hereinafter "Policy"].) At the time of the purchase, Bolton Offutt Donovan Investment Consulting Group, Inc., was a subsidiary of Bolton Offutt, offering investment consulting and actuarial review of benefit programs. In September of 2002, Bolton Offutt Donovan, Inc., changed its name to Bolton Partners, Inc. (See Def.'s Mem. Supp. CrossMot. Summ. J. Ex. E.) At the same time, its wholly-owned subsidiary, Bolton Offutt Donovan Investment Consulting Group, Inc., changed its name to Bolton Partners Investment Consulting Group, Inc. ("Bolton Partners")--the Plaintiff in this case. (See id. at Ex. F.) The comprehensive insurance policy at issue in this case provided several forms of business coverage including, inter alia, Worker's Compensation, Business Auto, and Commercial General Liability coverage. (See Policy at TR00106-TR00155.) The Commercial General Liability coverage insured against personal injury "caused by an offense arising out of [the insured's] business" excluding advertising injuries which were covered separately by the Policy. (Id. at TR00116.) "Personal injury" included injury arising out of "[o]ral, written or electronic publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services." (Id. at TR00118.) While the Policy provided that Travelers had "the . . . duty to defend . . . against any `suit' seeking [personal injury] damages," the Policy contained an exclusion for Designated Professional Services. It is undisputed that in the Policy in question, the description of excluded professional services merely stated "Professional." (See id. at TR00116, TR00154.) On November 13, 2002, Bolton Partners was sued in the Circuit Court for Prince William

2

County, Virginia, by the Variable Annuity Life Insurance Company, Inc., in a case captioned The Variable Annuity Life Insurance Company, Inc. v. Bolton Partners Investment Consulting Group, Inc. (f/k/a Bolton Offutt Donovan Investment Consulting Group, Inc.) and Bradley Smith ("the Lawsuit"). (See Pl.'s Mem. Supp. Summ. J. Ex. 1.) The Lawsuit arose when Bolton Partners was retained by the Prince William County School Board ("the Board") to evaluate eleven companies' proposals to offer supplemental retirement plan services. The Variable Annuity Life Insurance Company, Inc. ("Variable Annuity Life") had been providing annuitybased retirement services to the Board for approximately thirteen years and submitted one of the eleven proposals. Bradley Smith, a principal at Bolton Partners, prepared a report recommending that the Board select a company that utilized mutual fund products rather than annuity products, in part because of annuities' higher fees and costs. During a public hearing in September of 2002, Mr. Smith also allegedly accused Variable Annuity Life of improperly offering investment advice and not offering as many services to lower-income employees. Based upon a report of Bolton Partners and its evaluation selecting a company offering mutual fund services, Variable Annuity Life lost its contract with the Prince William County School Board. As a result, Variable Annuity Life sued Bolton Partners and its agent, Bradley Smith, for defamation, alleging that the contents of the report and Mr. Smith's statements at the hearing were misleading and false. Bolton Partners notified Travelers of the pending Lawsuit on December 9, 2002, and requested confirmation that the suit was covered under the Policy. On December 13, 2002, Travelers sent Bolton Partners a letter stating that it would not defend and/or indemnify it in the pending litigation. (See Compl. Ex. 3.) Travelers did not question that Bolton Partners was an

3

insured within the ambit of the Policy and further conceded that the claims brought by Variable Annuity Life fell "within the definition of `personal injury.'" (Id.) However, Travelers contended that the Designated Professional Services Exception "would preclude coverage in this matter." (Id.) As a result, Bolton Partners defended the Lawsuit at its own expense and the case was ultimately settled.. Bolton Partners then filed this action against Travelers in the Circuit Court for Baltimore City. On September 30, 2005, Travelers removed the case to this Court pursuant to 28 U.S.C.

Download Bolton Partners Investment Consulting Group, Inc. v. The Travelers Indemnity Com

Maryland Law