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March 30, 2003


The opinion of the court was delivered by: Emmet G. Sullivan, United state District Judge


In this action, plaintiff, Ms. Jean Spears, seeks to recover a $1,278,000 judgment against Intrados International Management ("Intrados") from its insurer, Nationwide Mutual Insurance Company ("Nationwide"). The judgment issued in a D.C. Superior Court tort action arising from an auto accident in which Ms. Spears was injured while working as an independent contractor for Intrados in the Ukraine. See Spears v. Intrados, Case No. 98CA5864 ("Superior Court case"). At the time of the accident, Intrados was insured under a business owners' insurance policy by Nationwide Insurance. As part of a settlement agreement reached in the Superior Court case, Intrados assigned its right of action against Nationwide for coverage under the policy to Ms. Spears in order to enable her to recover the judgment entered against Intrados from Nationwide. The Complaint filed in this case alleges a single count of breach of insurance contract, premised on Nationwide's failure to satisfy the judgment against Intrados pursuant to the business owners' insurance policy.

Currently pending before the Court are the parties' crossmotions for summary judgment. Because the Court finds that there exist genuine issues of material fact precluding entry of judgment for either party at this time, the motions for summary judgment are hereby DENIED.


The following facts are undisputed. On October 26, 1989, G.H. Wilmington, Inc., DBA, F. Ghadar Associates, DBA Intrados International Management Group, applied to defendant, Nationwide Mutual Insurance Company ("Nationwide") for insurance coverage. Def.'s Mot. Summ. J. Ex. 1. Nationwide, through its independent agent Jesse Evans, issued a business owner's policy, identified as policy # 52 BO 133 746, to Intrados. Def.'s April 1, 2002 Statement of Material Facts ("Def.'s Stat.") at 1; Def.'s Mot. Summ. J. Ex. 2; Pl.'s Stat. Material Facts ("Pl.'s Statement) ¶ 77. The policy was renewed each subsequent year, and was in effect from October 26, 1994 to October 25, 1995. Def.'s Stat. at 1. Additionally, "Intrados carried workers' compensation insurance through Nationwide." Pl.'s Stat. at ¶ 64; Def.'s Stat. Ex. 19.

Plaintiff Jean Spears, a U.S. citizen and resident of Long Island, N.Y., was employed by Intrados, an international management consulting agency, as an independent contractor from at least June 1995 to October 1995. Pl.'s Stat. ¶¶ 7, 8; Def.'s Stat. at 2; 1999 Spears. Dep. at 18-20. In the Summer of 1995, Ms. Spears traveled to the Ukraine as one of two leaders of a team performing an Intrados contract with USAID to promote capital markets in emerging Eastern European nations. Pl.'s Statement ¶¶ 1, 2; Def.'s Stat. at 2.

On August 4, 1995, while she and other Intrados independent contractors were returning from a meeting in the Ukraine related to the USAID/Intrados contract, Ms. Spears was injured in an automobile accident. Pl.'s Stat. ¶ 5, Def.'s Stat at 2. The driver of the car in which Ms. Spears was traveling ran a red light and struck another vehicle. Pl.'s Stat. ¶ 5, Def.'s Stat at 2. Ms. Spears' head hit the car's dashboard, and she sustained injuries to her eye, chest, neck, and knees. Def.'s Stat. at 2; Pl.'s Stat. ¶ 44. She was initially treated for these injuries at the U.S. Embassy in Kiev. Def.'s Stat. at 2; Pl.'s Stat. ¶ 44. 1999 Spears Dep. at 40-41, 46-47. The next day, she was transported to a hospital in London, England, seen by an eye specialist, and treated for three to four days. Def.'s Stat. at 2; Pl.'s Stat. ¶¶ 44-45. Upon her return to the United state, Ms. Spears received further treatment for visual problems and pain in her left eye. Def.'s Stat. at 2; 1999 Spears Dep. at 51-58.

On the day of the accident, Ms. Spears contacted Margaret Ghadar, Intrados Vice-Chairperson, to notify her that she had been injured and would be transported to London for further treatment. Pl.'s Stat. ¶ 44; Def.'s Stat. at 2. The costs of Ms. Spears' transport to London were covered under an insurance policy issued to Intrados by MEDEX specifically to cover medical evacuation costs. Pl.'s Stat. ¶¶ 44-45. Upon her return to the U.S., Ms. Spears was told by Intrados that her medical costs and lost wages would be covered under an insurance policy issued by CIGNA, Intrados' insurance carrier for claims arising under the Defense Base Act ("DBA").*fn1 Pl.'s Stat. ¶ 48; Def.'s Stat. at 2. Accordingly, after she was contacted by a CIGNA adjuster, Ms. Spears filed a "Report of Injury or Occupational Illness" claim form on August 15, 1995. CIGNA approved the claim and reimbursed Ms. Spears' for medical costs and lost wages over the next three years. Pl.'s Stat. ¶¶ 48, 50; Def.'s Stat. at 2-3. Plaintiff maintains that during the three year period following the accident, during which her medical bills and lost wages were covered by CIGNA pursuant to Intrados' DBA policy, she never asserted any claim against Intrados, nor did she say or do anything which would have alerted Intrados or CIGNA to the possibility that she might assert such a claim. Pl.'s Stat. ¶ 51.

From this point forward, the parties' versions of events begin to diverge, with material consequences. Defendant contends that "Intrados never at any point supplied notice of the August 4, 1995 accident to . . . Nationwide until March 3, 1999, over three and a half years after the occurrence." Def.'s Stat. at 3. However, there is some evidence that a representative of Intrados did attempt to notify the Nationwide agent who sold the policies to Intrados at some point "soon after" the accident, and was told that Ms. Spears' claims should be handled either as a worker's compensation case or a Defense Base Act case, and not through the Nationwide policies. Schmidt Aff. ¶¶ 6, 11; Pl.'s Stat. ¶¶ 63, 74-75, 78, 80-81. Nationwide claims to have no record of this conversation. Pl.'s Stat. ¶ 76, 82; see Def.'s Stat. at 3, 8. Because Ms. Spears' injuries were sustained overseas, the claims were eventually handled through CIGNA pursuant to the DBA policy. Pl.'s Stat. at ¶ 65.

It is undisputed that on August 3, 1998, on the advice of counsel consulted for the purpose of ascertaining her rights with respect to compensation for permanent injuries arising from the August 1995 automobile accident, Ms. Spears filed suit against Intrados in the District of Columbia Superior Court. Pl.'s Stat. ¶ 57; Def.'s Stat. at 3, Spears v. Intrados, 98CA5846 ("Superior Court case"). CIGNA provided Intrados with a defense in that case, in accordance with its obligations under the DBA policy. Pl.'s Stat. ¶¶ 59, 61. Upon denial of CIGNA/Intrados' motion for summary judgment, CIGNA entered into a settlement agreement with Ms. Spears. Def.'s Stat. at 4. Intrados, for its part, stipulated that it would not further defend against Ms. Spears' claim, but rather would assign to her any right it had to recover from Nationwide in connection with her claims pursuant the business owners liability policy. Def.'s Stat. at 4. Ms. Spears obtained a judgment for $1,278,000 against Intrados at the conclusion of the Superior Court case. Pl.'s Stat. ¶ 3.

In the course of defending Intrados in the Superior Court case, counsel for CIGNA, Ms. JoAnna Schmidt, inquired as to whether Intrados had any additional insurance policies which could conceivably cover Ms. Spears' claims. Pl.'s Stat. ¶¶ 63, 66, 70-71. Although an initial search did not reveal any applicable policies, on March 10, 1999, in preparation for Ms. Ghadar's deposition, another search was conducted, during which Ms. Ghadar's assistant located a Nationwide policy identifying the insured as "G H Wilmington Inc/Ghadar Associates DBA Intrados International Management." Id. ¶¶ 67, 71.*fn2 Ms. Ghadar later testified that she did not know what entity was insured by this policy. Id. ¶ 67. Neither did the agent who sold the policy, who testified that, until the date of his deposition, he believed G H Wilmington to be an individual somehow associated with Ms. Ghadar's husband. Evans Dep. at 70. There is also some evidence that the scope of the Nationwide policy was not clear from the face of it, and therefore a cursory review would not necessarily have placed the reader on notice that it covered the type of claim presented by Ms. Spears' circumstances. Pl.'s Stat. ¶ 68. For instance, the agent who sold the policy in 1989 testified that he regarded the policy to cover primarily fire and other damages to buildings. Id.

Ms. Ghadar also testified that, since the accident involving Ms. Spears, Intrados had ceased to exist as a business entity, and had been reorganized into other companies operating out of the same location. Pl.'s Stat. ¶ 85. It is not clear precisely where the Nationwide policy was located at the time it was found, or which company's files held the policy. Id. ¶ 84. Furthermore, Ms. Ghadar reported that there had been a significant turnover of employees who would have known about the policy during the relevant time frames. Id. ¶ 68.

Nevertheless, on March 11, 1999, immediately after the alleged discovery of the existence of the Nationwide business owner's policy and the scope of its coverage, Intrados filed a Notice of Loss relating to Ms. Spears' claims with Nationwide. Def.'s Mot. Summ. J., Ex. 6. On March 16, 1999, Ms. Schmidt, CIGNA's counsel, transmitted the pleadings from the D.C. Superior Court case to Nationwide. Pl.'s Stat. ¶ 83. Louise Quigley, the Nationwide adjuster assigned to handle the claim, made a decision to deny coverage within an hour of receiving it, following a conversation with her supervisor, but without consulting with Nationwide's in-house counsel, as was customary. Id. ¶ 90-91. Both Ms. Quigley and her supervisor, Mr. Palasieski, cite to a Nationwide "policy" of denying claims made more than 90 days from the date of loss as one of the bases for denying Intrados' claim relating to Ms. Spears' injuries. Id. ¶ 92.

It appears undisputed that no effort was made by Nationwide to ascertain the reason for Intrados' delay in reporting Ms. Spears' claim to the company. Id. ¶ 96.*fn3 However, Nationwide counters that, Intrados did not, in any subsequent correspondence, offer any excuse for its failure to provide timely notice of Ms. Spears' August 3, 1998 suit. Def.'s Stat. at ¶ 9. Standing in opposition to this assertion is a letter dated April 16, 1999 to Nationwide, from CIGNA's counsel, Ms. Schmidt, stating that Intrados contacted Nationwide's agent immediately following the accident, but was told that the Nationwide policy did not provide coverage for a "worker's compensation situation." Def.'s Stat. Ex. 18. Ms. Schmidt further asserted in that letter that once the Nationwide policy was discovered and determined to be potentially applicable in March of 1999, Nationwide was "promptly put on notice." Id.

Nationwide's March 29, 1999 letter to Intrados cites two reasons for denying the claim arising from Ms. Spears' accident. Def.'s Mot. Summ. J. Ex. 7. First, it refers the reader to the "Notice" provision of Intrados' business owners' policy and asserts that Intrados failed to comply with its terms, which require the insured to "see to it that" Nationwide is "notified as soon as practicable of an `occurrence' or an offense which may result in a claim," and to notify Nationwide "as soon as practicable" of any claim or suit filed against the insured. Id. (quoting Policy #52 08 BO 133746-0001, BUSINESSOWNERS LIABILITY COVERAGE FORM, SECTION E - LIABILITY AND MEDICAL EXPENSES GENERAL CONDITIONS, subsection (2) Duties in The Event of Occurrence, Claim or Suit) [emphasis added]. Second, Nationwide's disclaimer letter cites to the "auto" exclusion contained in the Intrados policy, which provides that bodily injury or property damage "arising out of the ownership, maintenance, use, or entrustment to others of any . . . `auto' . . . owned operated by or rented or loaned to any Insured" is excluded from coverage under the insurance contract. Id. (quoting Policy #52 08 BO 133746-0001, BUSINESSOWNERS LIABILITY COVERAGE FORM, SECTION B - EXCLUSIONS, subsection (1)(g)).

As noted supra, there is conflicting evidence as to whether Intrados attempted to notify Nationwide "soon after" Ms. Spears' accident, only to be told that neither of its Nationwide policies afforded coverage for such an occurrence. There is also considerable dispute among the parties with respect to the facts underlying the second basis cited by Nationwide for disclaiming coverage. Plaintiff asserts that the vehicle in which she was traveling on the day of the accident was not owned leased, hired, or borrowed by Intrados. Pl.'s Stat. ¶ 12. Rather, Ms. Spears' position is that the car in question belonged to an Intrados employee, namely the driver, and therefore any claims arising from its use are not excluded from coverage pursuant to the language quoted in the March 29, 1999 disclaimer letter. See Pl.'s Stat. ¶ 40. The Nationwide agent "admits that it was his intention to provide coverage to Intrados for claims arising from employee owned vehicles." Id.

There are considerable factual disputes in the record relating to the driver's status at the time of the accident. On the one hand, Ms. Spears states that, as one of two team leaders on the Intrados project in the Ukraine, she was instructed and authorized to hire, fire, manage, and supervise local "employees" on Intrados' behalf. Pl.'s Stat. at ¶ 22-26. Ms. Spears maintains that these local employees were not directly hired by the independent contractors in their own capacities, but rather pursuant to authority delegated by Intrados management. Id. ¶ 23. In support of her position, plaintiff points to Intrados' stipulation in the underlying D.C. Superior Court action that the driver of the vehicle in which Ms. Spears was injured was an Intrados employee. Pl.'s Stat. ¶¶ 19-21.

Conversely, Nationwide relies heavily on the deposition testimony of Ms. Ghadar, who testified that "[t]he only person that can hire an Intrados employee are the three people that are seniors in the organization," and that Intrados had no involvement with the negotiations between the consultants and any local persons providing them with assistance as needed. Def.'s Stat. at 6. However, Ms. Ghadar also testified that team leaders were responsible for ascertaining their local needs for the project, and had the authority to hire "local support personnel" depending on those needs. ...

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