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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND MUTUAL BENEFIT INSURANCE CO. : : v. : : JEFFREY LORENCE, et al. : Civil Action No. DKC 2000-827

MEMORANDUM OPINION Presently pending and ready for resolution in this declaratory judgment action are cross-motions for summary judgment. The court

now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, both motions will be

denied and the complaint will be dismissed. I. Background This complaint arises out of an insurance contract dispute as to whether there is coverage for a dog bite that occurred on February 17, 2000. On that date Defendants, Jeffrey Lorence and

Kathy Ann Tippett, owned two pit bulls which were housed at their residence at 26730 Connemara Lane, Mechanicsville, Maryland.

Defendants' property was insured by a Mutual Benefit homeowner's policy that was initially issued on August 17, 1998, the date they purchased their house. Lorence and Tippett owned these dogs for

approximately four years prior to February 17, 2000, with no reported record of aggression or violence. Lorence and Tippett

failed to disclose their ownership of the pit bulls at the time

they applied for insurance with Mutual Benefit. asked in pertinent part:

The application

9. Does applicant or any tenant have any animals or exotic pets? Paper No. 20, Ex. B. The answer given was "No" and the application

was signed by Lorence and Tippett on August 17, 1998. At the time of the original application, Mutual Benefit's underwriting guidelines prohibited issuance of a homeowner's policy to an applicants who owned pit bull dogs. (Mutual Benefit contends that statistics Paper no. 20, Ex. C. and the "inherent

viciousness" of pit bulls support its economic and business purpose in adopting the guidelines. Paper no. 20, p. 9.)

The homeowner's insurance coverage was renewed on August 17, 1999, but no further application or renewal questionnaire was required. Mutual Benefit did not send an inspector to the home to

verify the application representations made by Lorence and Tippett, either at the time of the original application or at the time of the renewal. On February 17, 2000, one of Lorence and Tippett's dogs, Buck, attacked Belinda Quade and her two year old son, Michael. Both

people were injured and were flown by helicopter to Medstar and Children's Hospitals in Washington, D.C. for treatment. After the

attack, Mutual Benefit received notice of the presence of the pit

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bulls for the first time, through a claim submitted by Lorence and Tippett for indemnification. In a letter dated March 15, 2000, Mutual Benefit notified Lorence and Tippett that this declaratory judgment action would be filed, to seek a ruling that it owed no duty to defend or indemnify based on the alleged material misrepresentation in the policy application. The complaint was filed in this court on March 23, By notice dated May

2000 against Lorence, Tippett and the Quades.1

5, 2000, Mutual Benefit also notified Lorence and Tippett that the company was cancelling their homeowner's insurance policy, on the ground that the company does not have a rate that "contemplates an insured misrepresentation of material fact", effective June 21, 2000, and would refund the "excess paid premium above the earned premium for the expired term." Paper No. 23, Ex. 7. Mutual

Benefit has refunded the premiums paid for the period June 21, 2000 through August 17, 2000. Neither party has instituted a proceeding before the Maryland Insurance Commissioner concerning the underwriting standards in effect at the time of the original policy or its renewal. As will

be discussed below, there are proceedings before the Commissioner presently concerning pit bull policies.

Federal jurisdiction is grounded on diversity of citizenship, with the amount in controversy exceeding $75,000. The parties agree that Maryland law applies. 3

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II.

Standard of Review While a federal court is authorized to issue a declaratory

judgment under 28 U.S.C.

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