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BELTWAY MGMT. CO. v. LEXINGTON-LANDMARK INS. CO.

September 18, 1990

BELTWAY MANAGEMENT CO., Individually and t/u/o MONTGOMERY MUTUAL INSURANCE COMPANY, Plaintiffs,
v.
LEXINGTON-LANDMARK INSURANCE COMPANY, Defendant


Louis F. Oberdorfer, United States District Judge.


The opinion of the court was delivered by: OBERDORFER

LOUIS F. OBERDORFER, UNITED STATES DISTRICT JUDGE

 This suit considers whether an insurance carrier must defend an insured landlord against its tenants' claim for breach of the implied warranty of habitability. The Broad Form Comprehensive General Liability Endorsement (the "Broad Form Endorsement") issued to the landlord here covers "personal injury," defined in the endorsement to include "wrongful entry or eviction or other invasion of the right of private occupancy." *fn1" The ultimate issue is whether "other invasions of the right of private occupancy" encompass violations of the warranty of habitability.

 I. Background

 A. Procedural History

 This controversy about an insurer's duty to defend has its origin in a case currently pending in the Superior Court for the District of Columbia. In early March of 1987, the Tyler House Tenant Council (the "Tenant Council") commenced an action against Beltway Management Company ("Beltway") and several others in the Superior Court of the District of Columbia. *fn2" The Tenant Council is a nonprofit corporation made up of the tenants of the Tyler House, a three-hundred-unit apartment complex in Washington, D.C. *fn3" It sued Beltway, the company responsible for managing the apartments, for, inter alia, breach of the common law and statutory warranties of habitability. *fn4" The complaint alleged numerous fire and housing code violations, including unlit hallways and stairwells, inoperative fire alarms, loose ceilings, broken windows, exposed wiring, roach and rodent infestation, inadequate cooking facilities, and periodic deprivations of heat. *fn5"

 In this case, Beltway and its excess insurer, Montgomery Mutual Insurance Company ("Montgomery"), sues Lexington-Landmark Insurance Company ("Landmark"). Landmark is Beltway's primary insurer. Montgomery is Beltway's excess insurer. *fn6" When the Tenant Council sued Beltway, Beltway separately demanded that both Montgomery and Landmark defend it. *fn7" Landmark refused to do so, whereupon Montgomery agreed to provide the defense. *fn8" Beltway and Montgomery now sue Landmark for breach of its duty to defend.

 Landmark has moved for summary judgment on the issue of its duty to defend. Plaintiffs have filed a cross-motion for partial summary judgment on the same issue, reserving the question of the nature and extent of damages sustained. Because these motions focus upon the interpretation of contractual provisions and because neither party contends there is relevant parol evidence, there are no genuine issues of material fact in dispute. As a consequence, this controversy is susceptible to resolution on a motion for summary judgment. See Fed. R. Civ. Proc. 56(c).

 B. The Policy

 The insurance contract in question was not issued directly to Beltway. Instead, it was part of a purchase of insurance by the National Investment Development Corporation extending from January 1, 1986 to January 1, 1987. *fn9" The contract covered over one hundred and thirty-two locations nationwide, called for an advance premium of well over a million dollars, and contemplated payments of up to one million dollars per claim. *fn10" The Tyler House is one of those locations covered by that policy, and Beltway is an additional named insured. *fn11"

 Like most insurance contracts, this policy is an amalgam of general forms and specially tailored modifications. The bulk of the coverage is described in the standard "Comprehensive General Liability Insurance" form. That general form is in turn modified by the "Broad Form Comprehensive General Liability Endorsement," a general liability extension schedule, twelve typed endorsements, and an elevator collision insurance attachment. The Comprehensive General Liability form covers most accidental injuries to persons and to property. The Broad Form Endorsement extends that coverage to a broad array of injuries caused either intentionally or through negligence such as libel, malpractice, and wrongfully entry as well as some damage to property in the custody of the insured. Some injuries arising out of negligent or intentional acts are in turn excluded by typed endorsements. *fn12"

 The passage in dispute is found in section II of the Broad Form Endorsement. The section begins by providing that:

 
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury to which this insurance applies, sustained by any person or organization and arising out of the named insured's business, within the policy territory . . . .

 Broad Form Endorsement § II (emphasis added). The endorsement then describes the duty to defend: "The company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury . . . ." Id. The term "personal injury" is not used in the normal sense in these passages. It does not refer to physical injuries; those are described as bodily injuries and treated in section III of the Broad Form Endorsement. Personal injury is specially defined to encompass three particular classes of injuries:

 
"Personal Injury" means injury arising out of one or more of the following offenses committed during the policy period:
 
(1) false arrest, detention, imprisonment, or malicious prosecution;
 
(2) wrongful entry or eviction or other invasion of the right of private occupancy;
 
(3) a publication or utterance
 
(a) of a libel or slander or other defamatory or disparaging material, or
 
(b) in violation of an individual's right of privacy . . . .

 See id. at § II(D).

 II. Preliminary Matters

 Beltway and Landmark dispute whether section II(D)(2) of the Broad Form Endorsement extends coverage over the Tenant Council's claims of breach of the warranty of habitability. Before determining whether it does, it is necessary to consider several preliminary matters. The first matter is the proper law to apply in this case.

 A. Choice of Law

 Because this case is before the Court on the basis of diversity of citizenship, state law governs its determination. Generally the law of the state in which the federal court is located governs, and the parties have assumed in their briefs and at oral argument that District of Columbia contract law controls the interpretation of the Policy. It is, however, possible that New York law should apply. Accordingly, it is necessary to investigate what law governs interpretation of the Policy under District of Columbia conflicts of law doctrine.

 There is some evidence that the Policy was drafted with New York law in mind. Several of the so-called amendatory endorsements are labelled "New York." See Amendatory Endorsement, Policy; Cancellation Provision or Coverage Change Endorsement, Policy; Amendment of Hired Automobile and Non-owned Automobile Liability Coverage, Policy. These endorsements seem to make technical amendments to conform the general forms used in this insurance contract to New York law. None of these amendments, however, affects section II(D)(2). More importantly, the contract does not explicitly designate which state's law should apply to it. Thus, there are only a few factors indicating that New York law should be applied to this controversy.

 By contrast, there are strong factors arguing in favor of applying District of Columbia law. As stated above, both parties have assumed in their briefs and at oral argument that D.C. law applies. The underlying events took place in the District of Columbia. Moreover, the District of Columbia has a strong interest in the resolution of this conflict because it affects the rights of a landlord doing business within the District and because it may indirectly affect the rights of the tenants of the Tyler House domiciled within the District. New York by contrast has little interest in this conflict because none of the parties to it are domiciled within that state. Because the District of Columbia has both a stronger interest in the resolution of this conflict and more significant contacts with the suit, under District of Columbia conflicts of law doctrine District of Columbia law should govern the construction of the insurance contract. See Hercules & Co. v. Shama Restaurant Corp., 566 A.2d 31, 40-41 (D.C. 1989); Estrada v. Potomac Elec. Power Co., 488 A.2d 1359, 1361 & n. 2 (D.C. 1985).

 Before determining whether under District of Columbia law Landmark has a duty to defend against claims of breach of the warranty of habitability, it is necessary to review the law concerning these items separately.

 B. The Implied Warranty of Habitability

 Under District of Columbia law, the warranty of habitability is a nonwaivable term implied into all lease agreements. See, e.g., George Washington University v. Weintraub, 458 A.2d 43, 47 (D.C. 1983). The warranty requires landlords to "exercise reasonable care to maintain rental premises in compliance with the housing code in order to fulfill the implied warranty of habitability." Id. at 49; see also Javins v. First Nat'l Realty Corp., 138 U.S. App. D.C. 369, 428 F.2d 1071, 1081 (D.C. Cir. 1970) (describing the warranty of habitability as imposing upon the landlord the "continuing obligation to the tenant to maintain the premises in accordance with all applicable law."). *fn13" The District of Columbia Housing Regulations require landlords to perform "repairs and maintenance designed to make a premises or neighborhood safe ...


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