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September 23, 1998

Britamco Underwriters, Inc., Plaintiff,
Nishi, Papagjika & Associates, Inc., Paul Papagjika, John Reger, The American Hellenic Educational Progressive Association, Defendants.

The opinion of the court was delivered by: GREEN


 Before the Court are Defendant American Hellenic Educational and Progressive Association's ("AHEPA") Motion for Summary Judgment on its Counter-Claim and on the Declaratory Judgment Complaint of Plaintiff Britamco Underwriters, Inc. ("Britamco"), Britamco's Opposition thereto, and AHEPA's Reply. For the reasons set forth below, AHEPA's motion is denied.


 This declaratory judgment action involves a dispute over insurance coverage. It is related to an earlier case before this Court in which AHEPA, a charitable fraternal organization, sued the accounting firm of Nishi, Papagjika, and Associates ("NPA") and Certified Public Accountants Paul Papagjika ("Papagjika") and John Reger ("Reger"), for professional malpractice ("tort suit"). AHEPA now seeks from Britamco, the insurer of the defendants in the tort suit, payment of the $ 1,000,000 judgment returned in AHEPA's favor in that suit. The facts giving rise to the tort suit and the developments during the course of that litigation are set forth in detail below.

 In 1993, AHEPA retained NPA to conduct an audit of the organization for that fiscal year. (Def.'s Ctr-Clm. P 2). Following the audit, AHEPA discovered irregular bank account ledgers and discrepancies in accounting records and membership lists that revealed large sums of money had been embezzled by AHEPA employees in 1992 and 1993. Id. AHEPA filed a Complaint asserting counts of negligence and breach of contract against NPA, Papagjika, and Reger for their failure to uncover the embezzling scheme in the 1993 audit. (Pf.'s Compl. P 10). Pursuant to the defendants' Accountants Professional Liability Policy ("insurance policy"), Britamco selected and paid for defense counsel in the case. (Def.'s Ctr-Clm. P 7).

 The Court set November 30, 1996, as the deadline for discovery completion but later extended it to December 20, 1996. (Sch. Order of 5/14/96; Amended Sch. Order of 11/27/96). On December 18 -- two days before the close of discovery, six weeks before the scheduled trial date, and more than one year after the filing of the original complaint -- AHEPA filed a motion for leave to amend its complaint to add counts of fraud and civil conspiracy. (AHEPA Mtn. of 12/18/96). The Court denied the motion on grounds of undue delay and potential prejudice to the Defendant's case, noting that the "proposed amendments concerning conspiracy and fraud would change the very nature of this case from a theory of negligence to one where intent would become a key element of the alleged wrongs." (Order of 1/14/97 at 2).

 On January 21, 1996, Defendants NPA, Papagjika and Reger filed a motion for a continuance of the upcoming trial, claiming that their insurance carrier (Britamco) intended to file a declaratory judgment action to determine the extent, if any, of insurance coverage for the claims underlying the tort suit. (NPA Mtn. of 1/21/97 PP 2-3). The defendants maintained that Britamco's unexpected claim of potential non-coverage triggered the need for Papagjika and Reger to retain individual counsel to protect against suddenly more significant personal liability. (NPA. Mem. Supp. Mtn. Cont. at 4). AHEPA opposed the continuance. (AHEPA Mtn. of 1/23/97). It argued that the request to stay the trial pending a separate action resolving issues of intent patently contradicted NPA's earlier opposition -- based in large part on the rapidly approaching trial -- to allowing amendments to the Complaint which would have introduced the exact same issues of intent. (AHEPA Mtn. of 1/23/97 at 2-3). AHEPA in fact noted that "under Maryland practice, declaratory judgment actions such as this customarily are not filed until after trial." (AHEPA Mtn. of 1/23/97 at 3).

 The Court denied NPA's request for a continuance because the tort suit involved specific claims of accounting malpractice and negligence distinct from the questions of intentional fraud which would determine liability under the insurance policy. (Order of 1/27/97 at 2). Papagjika's and Reger's claims regarding the need for new counsel were met with particular circumspection, as the Court recalled an August 1996 sanctions hearing at which defense counsel averred that all issues with respect to his representation of the defendants had been resolved and the case would proceed without delay. (Order of 1/27/97 at 2-3). The Court's decision to deny the continuance was fortified by the fact that the declaratory judgment action alluded to had not yet been filed. Id.

 The trial in the tort suit went forth as scheduled, with testimony and evidence limited to that which pertained to negligent, rather than intentional or conspiratorial, practices and conduct. The jury, instructed to consider the sole question of negligence, awarded $ 1,000,000 to AHEPA. This Court's judgment on the verdict was later affirmed on appeal. American Hellenic Educ. Progressive Assoc. v. Nishi, Papagjika, & Assoc., P.C., No. 97-7061 (D.C. Cir. Jan. 30, 1998).

 II. Discussion

 A. Jurisdiction and Choice of Law

 Jurisdiction in this case is founded on diversity of citizenship pursuant to 28 U.S.C. § 1332 and the declaratory action remedy provided by 28 U.S.C. § 2201. A federal court deciding a diversity case must apply the conflicts of law principles of the forum in which it sits. Gray v. Grain Dealers Mut. Ins. Co., 276 U.S. App. D.C. 388, 871 F.2d 1128, 1129-30 (D.C. Cir. 1989). In the District of Columbia, these principles direct the Court to weigh the interests of each jurisdiction involved in the dispute and apply the law of the forum with the greatest interest. Greycoat Hanover F St., L.P. v. Liberty Mut. Ins. Co., 657 A.2d 764, 767-8 (D.C. 1995).

 The Court finds that Maryland's interest is paramount here. NPA, Papagjika, and Reger conducted the business which was the subject of the insurance policy at their offices in Maryland and the policy was effectuated in Maryland. (See Policy Declarations page, noting "Inception: 12:01 A.M. Standard Time at the Address of the Named Insured as Stated Herein."). Similarly, the endorsement of the increase in limits of liability became effective in Maryland. (See Endorsement effective 1/1/94 and dated 1/15/94). The premiums and policy applications were mailed to a Maryland location, completed there, and then mailed back to Florida. (Pf.'s Mtn. Supp. Summ. J. at 12). Furthermore, the record from the tort suit reflects that while field work for the auditing occurred at AHEPA's office in the District of Columbia, the statistical tabulations, verification of documents, and issuance of audit reports and related letters occurred in Maryland. (See Transcript of Trial, 2/11/97, at 13-19). Finally, AHEPA has stipulated that the policy was made effective in Maryland and Britamco has not provided any evidence to contradict that assertion. *fn1" (Def.'s Stm. of Undisp. Facts). That field work occurred at AHEPA's office in the District of Columbia and the policy was drafted in Florida are not considerations sufficient to override Maryland's interest in litigation concerning an insurance policy made effective, paid for, and practiced under within Maryland.

 B. Standing

 Next, Britamco claims that AHEPA does not have standing to sue Britamco directly for the $ 1,000,000 judgment. This assertion is incorrect. It is a well-established principle of contract law that "the right of the injured claimant to collect from the insurer of the one who harmed him derives from the contract right of the tortfeasor to have the insurer pay for him . . . what otherwise he would be liable to pay." Travelers Ins. Co. v. Godsey, 260 Md. 669, 273 A.2d 431, 434 (Md. 1971). Furthermore, Section 5(F) of the insurance policy - 'Action Against Company' - specifically recognizes the potential for third party standing. (See Policy § 5(f), stating "No action shall lie against the Company by any person or organization unless, as a condition precedent thereto, there shall have been . . . [a] final[] determination after actual trial or by written agreement [regarding liability]."). Finally, the Maryland Insurance Code provides that "any person claiming, by, through, or under the insured" may maintain an action against the insurer "under the terms of the policy for the amount of any judgment recovered in such action, not exceeding the amount of the policy." Art. 48A, Anno. Code of Md. § 481. As the victim of the insured accountants' negligence, AHEPA clearly meets these criteria.

 C. Summary Judgment

 A motion for summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The Court must view the material presented in the light most favorable to the non-moving party, Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970), and resolve all doubts as to facts or the existence of facts against the moving party. United States v. Diebold, 369 U.S. 654, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962).

 AHEPA's motion for summary judgment seeks a declaration that Britamco is liable to AHEPA for $ 1,000,000. AHEPA invokes the doctrines of waiver, election, estoppel, and issue preclusion as bars to Britamco's "intentional acts" and "policy limits" defenses. Britamco contends that AHEPA's motion is premature, that further discovery is necessary, and that a plethora of disputed facts mandate a trial. Resolving all doubts as to the existence of facts against the moving party, the Court concludes that it must deny summary judgment because AHEPA has failed to carry the heavy burden of showing that there are no genuine issues for trial. As the following analysis is equally applicable to both the "intentional acts" and "policy limits" defenses, the Court addresses them jointly, starting with the question of issue preclusion and then addressing collectively the issues of waiver, estoppel, and election.

 1. Issue Preclusion

 At issue in this case is whether the accountants breached the "Exclusions" provision of the insurance policy, which states that coverage "does not apply to any claim . . . arising from a fraudulent criminal or malicious act, error or omission, or from an intentional act, error or ...

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