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Zurich American Insurance Co., et al. v. Fieldstone Mortgage Co.
State: Maryland
Court: Maryland District Court
Case Date: 03/24/2008
Preview:IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ZURICH AMERICAN INSURANCE COMPANY, et al. v. FIELDSTONE MORTGAGE CO. : : : : : : : : ...o0o... MEMORANDUM Now pending before the court is a motion to reconsider and/or for certification of a question of law to the Maryland Court of Appeals filed by plaintiffs Zurich American Insurance Company, American Zurich Insurance Company, and American Guarantee & Liability Insurance Company (collectively "Zurich") against defendant Fieldstone Mortgage Company ("Fieldstone"). Relevant to this motion, the court previously granted Fieldstone's request for legal fees and costs associated with successfully defending against Zurich's declaratory judgment action regarding Fieldstone's insurance coverage. Zurich American Ins. Co. v. Fieldstone Mortgage Co., 2007 WL 3268460 (D. Md. 2007). More specifically, the court found that under Maryland law a prevailing insured may recover fees in a declaratory judgment action where the insurer provides a defense for the insured in the underlying litigation, but subsequently and unsuccessfully brings a declaratory action to avoid its obligation. Id.1 Because Zurich has not provided a sufficient basis to alter or amend this ruling, and because certification of this

Civil No. CCB-06-2055

Only in the sense that Zurich initially provided a defense (the cost of which it then sought to impose on its insured through the declaratory judgment action) did the court note in its earlier memorandum that Zurich had "not `breached' its obligation." Zurich American Ins. Co. v. Fieldstone Mortgage Co., 2007 WL 3268460, at *7 (D. Md. 2007). 1

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question of law to the Maryland Court of Appeals is not necessary, Zurich's motion will be denied. Courts have generally recognized three grounds for granting a motion for reconsideration: (1) an intervening change in controlling law; (2) to account for new evidence; or (3) to correct a clear error of law or prevent manifest injustice. See EEOC v. Lockheed Martin Corp., 116 F.3d 110, 112 (4th Cir. 1997); Potter v. Potter, 199 F.R.D. 550, 552 (D. Md. 2001). Although "there are `circumstances when a motion to reconsider may perform a valuable function,' . . . it [is] improper to use such a motion to `ask the Court to rethink what the Court ha[s] already thought through - rightly or wrongly.'" Potter, 199 F.R.D. at 552 (quoting Above the Belt, Inc. v. Bohannan Roofing, Inc., 99 F.R.D. 99 (E.D. Va. 1983)). Moreover, in determining whether to certify a question of law to a state court, a federal court should only do so "if the available state law is clearly insufficient." Roe v. Doe, 28 F.3d 404, 407 (4th Cir. 1994). Otherwise, a federal court "should do as the state court would do if confronted with the same fact pattern." Id. The crux of Zurich's argument is that Maryland law does not give an insured the right to recover fees related to successfully defending a declaratory action filed by an insurer who has defended the insured in an underlying action. The court disagrees. Maryland courts have crafted amongst the broadest common law exceptions to the American rule in the liability insurance context, including where the insurer institutes a declaratory action and the insured is successful in his defense. See Cohen v. Am. Home Assur. Co., 258 A.2d 225, 239 (Md. 1969) (noting that a prevailing insured may recover fees in a declaratory judgment action regarding coverage); Collier v. MD-Individual Practice Assoc., 607 A.2d 537, 542 (Md. 1992) (noting that where

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liability insurance is involved, the insured may recover fees whether the declaratory judgment action is brought by the insured or the insurer); see also 16 COUCH ON INSURANCE
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