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Redmond v. State Farm Insurance Co.

May 06, 1999

JOHN R. REDMOND, APPELLANT,
v.
STATE FARM INSURANCE COMPANY, ET AL., APPELLEES.



Before Wagner, Chief Judge, and Terry and Reid, Associate Judges.

The opinion of the court was delivered by: Reid, Associate Judge

Notice: This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.

Appeal from the Superior Court of the District of Columbia (Hon. Steffen W. Graae, Trial Judge)

Argued May 5, 1999

This case raises the issue as to whether an insurance policy covers appellant John R. Redmond with respect to lead paint claims made by tenants of an apartment building which he owns. Mr. Redmond sought a declaratory judgment that his insurance policy imposed a duty on appellee State Farm Insurance Company ("State Farm") to defend and indemnify him with respect to lead paint claims filed by tenants of the apartment building. The trial court rendered judgment for State Farm. Mr. Redmond filed a timely appeal, contending that although his insurance policy contained a lead paint claims exclusion clause, the trial court erred in (1) failing to conclude that he had a reasonable expectation of insurance coverage for lead paint claims; (2) declaring that State Farm did not breach its insurance contract with him and was not estopped from denying coverage; (3) determining that the jury's finding of contributory negligence extinguished the jury's finding of negligent representation; and (4) disregarding the advisory jury's findings. We affirm.

FACTUAL SUMMARY

The record on appeal shows that in 1990, Mr. Redmond purchased the Argyle apartment building, located at 3220 17th Street, N.W., in the District of Columbia. Prior to closing on the building, he sought insurance coverage from State Farm. He met with James E. Reid, Jr., one of State Farm's agents, to discuss insurance, because a condition of his mortgage loan was that he obtain "full coverage on the property." The policy which he discussed with Mr. Reid was described as an "all risk" policy, and Mr. Redmond assumed that it covered "everything." He testified that he never received or read his policy and that the only documents he actually saw were a declaration page or certificate of insurance; a price quote; and a brochure on apartment building insurance.

On cross-examination, Mr. Redmond stated that he began his experience in the real estate field around 1973; had previously purchased several apartment buildings for which he had obtained insurance; and had self-managed some of the buildings. He never discussed policy coverage for lead paint claims with Mr. Reid, and acknowledged that the apartment building brochure Mr. Reid gave him stated: "This brochure contains only a general description of coverages and is not a statement of contract. All coverages are subject to the exclusions and conditions in the policy." Mr. Redmond knew that insurance policies contained exclusions with respect to liability coverage, but did not inquire about the exclusions in his policy; nor did he even think about lead paint coverage when he met with Mr. Reid in May 1990. Mr. Reid was aware that State Farm had excluded lead paint coverage since August 24, 1987.

A copy of the policy was mailed to "John and Rebecca Redmond c/o Long & Foster." At the time of the mailing, Long & Foster served as the property manager for the Argyle apartment building and was authorized to receive the insurance policy and related documents. On January 10, 1991, Washington Realty assumed the property management duties for the Argyle, and State Farm forwarded a copy of the Redmond policy, including the lead paint claim exclusion page, to Washington Realty. Subsequent renewal documents were sent directly to the Argyle apartment building and contained the lead paint exclusion. As of 1993, when Mr. Redmond began to manage the apartment building himself, the insurance renewal notices and documents were sent directly to him.

In 1993 and 1994, two of Mr. Redmond's tenants in the Argyle apartment building sued him for the negligent exposure of their minor sons to lead-based paint which allegedly injured the children. Mr. Redmond requested that State Farm defend and indemnify him. State Farm declined, citing the lead paint exclusion clause in his insurance policy which stated: "It is agreed that Section II [pertaining to comprehensive business liability] of this policy does not provide coverage for bodily injury arising out of the ingestion or inhalation of paint containing lead or lead compounds." Mr. Redmond filed suit to ascertain whether State Farm was compelled to defend and indemnify him with regard to these lawsuits, and any other lead paint claims filed in the future. *fn1

Mr. Redmond did not properly demand trial by jury in a timely manner under the Superior Court Civil Procedure rules. As a result, he filed a motion for a jury trial. The trial court granted his motion under Super. Ct. Civ. R. 39 (c), but only to the extent that: "The factual question of whether [Mr.] Redmond received notice of the lead paint exclusion in the insurance policy issued by . . . State Farm will be tried by a jury, and any purely equitable issues remaining will be tried by the court." The trial Judge presented a verdict form to the jury, however, which required the jury to decide more than the question of whether Mr. Redmond received notice of the lead paint exclusion. The following questions were formulated for the jury's response:

"(1) Did Mr. Redmond and Mr. Reid enter into a contract for State Farm to provide lead paint coverage in its "all risk" policy?"

"(2) Did Mr. Redmond have an objectively reasonable expectation that he would be covered for lead paint claims under his State Farm policy for the following years? (Check): 1990-91, 1991-92."

"(3) Did Mr. Redmond or his agent(s) receive the original or a copy of the State Farm insurance policy, declaration sheets, or renewal notices during the following years? 1990-91, 1991-92."

"(4) Did Mr. Reid have a duty to disclose to Mr. Redmond that the "all risk" policy State Farm would issue did not ...


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