Liberty Mutual Insurance Company v. Cb Richard Ellis, Incorporated

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1140
LIBERTY MUTUAL INSURANCE COMPANY; AMG REALTY
PARTNERS, LLP,
Plaintiffs - Appellees,
and
LIBERTY MUTUAL INSURANCE COMPANY, as Subrogee
of AMG Realty Partners, LP,
Plaintiff,
versus
CB RICHARD ELLIS, INCORPORATED; ZURICH
INSURANCE COMPANY,
Defendants - Appellants.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:05-cv-00324-RDB)
Submitted: April 19, 2007 Decided: June 29, 2007
Before WILKINS, Chief Judge, and KING and DUNCAN, Circuit Judges.
Reversed and remanded by unpublished per curiam opinion.

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David B. Stratton, D. Stephenson Schwinn, JORDAN, COYNE & SAVITS,
L.L.P., Washington, D.C., for Appellants. Warren D. Stephens,
DECARO, DORAN, SICILIANO, GALLAGHER & DEBLASIS, L.L.P., Lanham,
Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
CB Richard Ellis, Inc. and Zurich Insurance Company
(Appellants) appeal a district court order granting summary
judgment against them and denying their motion for summary judgment
in an action prosecuted by Liberty Mutual Insurance Company and AMG
Realty Partners, LLP (Appellees). We reverse and remand for entry
of judgment in favor of Appellants.
I.
In March 1999, AMG and Ellis entered into a Property
Management Agreement (PMA), the following provisions of which are
relevant here:
4.1 Insurance. [AMG], at its expense, shall obtain
and keep in force adequate insurance ... against
liability for loss, damage or injury to property or
person which might arise out of the occupancy,
management, operation or maintenance of the Property
covered by this Agreement ....
....
4.2 Agent’s Insurance. .... [Ellis] must maintain
Commercial General Liability Insurance in an amount not
less than $10,000,000, Combined Single Limit naming [AMG]
and Maritime Realty Corporation. [AMG] must be named as
an additional insured as its interest may appear on
[Ellis’] insurance policies....
....
4.4 Waiver of Subrogation. Any insurance carried
by either party with respect to the Property or any
occurrence thereon shall, if it can be so written without
additional premiums or with an additional premium which
the other party agrees to pay, include a clause or
endorsement denying to the insurer rights of subrogation
against the other party to the extent rights have been

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waived by the insured hereunder prior to occurrence of
injury or loss. Each party, notwithstanding any
provisions of this Management Agreement to the contrary,
hereby waives any right or recovery against the other for
injury or loss due to hazards covered by such insurance.
....
8.7 Indemnification. A. [Ellis] shall at all times
indemnify and hold harmless [AMG], its partners, members,
shareholders and its and their respective officers,
directors, employees and agents from and against any and
all claims, losses, liabilities, actions, proceedings and
expenses (including reasonable attorneys’ fees,
disbursements and court costs) arising out of (I) any
breach of the representations and warranties made by
[Ellis] in this Agreement or any breach of any term,
covenant or condition to be performed or observed by
[Ellis] under this Agreement, or (ii) any negligent acts
or omissions or willful and deliberate misconduct by
[Ellis], its employees, contractors or agents.
B. [AMG] shall at all times indemnify and hold
harmless [Ellis], its partners, members, shareholders and
its and their respective officers, directors, employees
and agents from and against any and all claims, losses,
liabilities, actions, proceedings and expenses (including
reasonable attorneys’ fees, disbursements and court
costs) arising out of (I) ownership or operation of the
Property prior to the commencement of the term of this
Agreement, or (ii) any breach of the representations and
warranties or covenants made by [AMG] in this Agreement
or (iii) any negligent acts or omissions or willful and
deliberate misconduct by [AMG], its employees,
contractors or agents (other than [Ellis]).
J.A. 235-36, 243-44.
In accordance with its obligations under the PMA, AMG obtained
a policy from Liberty’s predecessor-in-interest, Employers
Insurance of Wausau, with limits of $1,000,000 per occurrence,
$2,000,000 general aggregate other than products-completed

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operations, and $2,000,000 products-completed operations. The
policy stated:
We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury” or
“property damage” to which this insurance applies. We
will have the right and duty to defend the insured
against any “suit” seeking those damages....
Id. at 157. In addition to naming AMG as an insured, the policy
also included as “an insured,” “[a]ny person (other than your
‘employee’), or any organization while acting as your real estate
manager.” Id. at 166. Finally, the policy contained the following
“other insurance” provision:
a. Primary Insurance
This insurance is primary except when b. below
applies. If this insurance is primary, our
obligations are not affected unless any of the
other insurance is also primary....
b. Excess Insurance
This insurance is excess over:
....
(2) Any other primary insurance available to
you covering liability for damages arising out
of the premises or operations for which you
have been added as an additional insured by
attachment of an endorsement.
Id. at 169, 209.
Also as a result of the PMA, Ellis obtained a policy from
Zurich that contained the same limits as the Wausau policy and
provided:

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Fields-Moore subsequently amended her complaint to allege
claims against Ellis, but those claims were dismissed as being
time-barred.
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We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury” or
“property damage” to which this insurance applies....
Id. at 340. It included the following Blanket Additional Insured-
Contractual Endorsement:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
WHO IS AN INSURED (Section II) is amended to include as
an insured any person or organization with whom you have
executed a written contract prior to the occurrence of a
loss with respect to liability arising out of the
performance of that written contract between you and that
person or organization, and subject to the specific
provisions of the written contract where the provisions
of the contract require that the person or organization
be included as an insured....
Id. at 359. It also contained an “other insurance” provision,
which states that the insurance “is excess over ... [a]ny insurance
policy which extends coverage to you as a real estate manager.”
Id. at 295.
On March 2, 2000, Helen Fields-Moore was allegedly injured
when she tripped over an electrical cord in a parking garage in
Towson, Maryland that Ellis managed pursuant to the PMA. Fields-
Moore subsequently filed suit in Baltimore County Circuit Court
against AMG, AMG’s parking lot operator (Landmark Parking, Inc.),
and other defendants. 1 The parties eventually settled the action
for $175,000, with AMG and Landmark each paying one-third of that

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amount, and Fields-Moore agreeing to forgo collection of the
remainder for 12 months or until the conclusion of this litigation.
Liberty subsequently brought suit against Appellants in
federal district court, alleging that Zurich breached its duty to
defend and indemnify AMG regarding Fields-Moore’s claims and that
Ellis breached its duties under the PMA to maintain the required
insurance and to indemnify AMG in the Fields-Moore suit. Ellis
later filed a third-party complaint against AMG, and the district
court granted Appellees’ motion to realign the parties. In
considering cross-motions for summary judgment, the court concluded
that consideration of the “other insurance” provisions of the two
policies demonstrated that Liberty holds primary insurance for
Fields-Moore’s claims and Zurich holds only excess coverage. The
court nevertheless determined that Ellis was obliged under the PMA
to indemnify AMG regarding Fields-Moore’s claims. On that basis,
the district court granted summary judgment to Appellees and denied
Appellants’ motion.
II.
We review the grant of summary judgment de novo, viewing the
disputed facts in the light most favorable to the non-moving party.
See Bacon v. City of Richmond, 475 F.3d 633, 637 (4th Cir. 2007).
When reviewing the disposition of cross-motions for summary
judgment, “we consider each motion separately on its own merits to

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determine whether either of the parties deserves judgment as a
matter of law.” Id. at 637-38 (internal quotation marks omitted).
A.
The parties agree that Maryland law applies here and that the
policies provide coverage for Fields-Moore’s claims. They also do
not challenge the conclusion of the district court that, absent
Ellis’ promise to indemnify AMG for claims such as those advanced
by Fields-Moore, the Liberty policy would provide primary coverage
and the Zurich policy would provide only excess coverage.
Appellants argue, however, that the district court erred in ruling
that, notwithstanding the language of the respective policies,
Ellis’ promise to indemnify AMG for Ellis’ own negligence required
Appellants to indemnify Appellees for the costs relating to Fields-
Moore’s claims. We agree.
As Appellants maintain, Ellis’ indemnification promise does
not apply to Fields-Moore’s claims because Ellis agreed to
indemnify AMG only for losses that were not covered by insurance.
Although Article VIII of the PMA provides that Ellis and AMG will
indemnify each other for their own negligent acts and omissions,
Article IV states that “[e]ach party, notwithstanding any
provisions of this Management Agreement to the contrary, hereby
waives any right or recovery against the other for injury or loss
due to hazards covered by” “insurance carried by either party with
respect to the Property or any occurrence thereon.” J.A. 236

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The district court concluded that this reading would “render
Ellis’ promise to indemnify AMG meaningless.” J.A. 483. But that
is simply not the case. The indemnification promise clearly
applies to any loss for which the policies do not provide
coverage.
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Moreover, even if Ellis’ indemnification promise applied to
Fields-Moore’s claims, the Zurich policy still would provide only
excess coverage. As we recently held on materially identical
facts, the indemnification agreement between the insureds here
affects only liability between those parties; it does not define
the obligations that the respective insurers have to their
insureds. See Travelers Prop. Cas. Co. of Am. v. Liberty Mut.
Ins. Co., 444 F.3d 217, 224-25 (4th Cir. 2006). Thus, even if
Ellis’ indemnification promise required it to indemnify AMG for
all of the costs relating to Fields-Moore’s claims, that still
leaves the question of which policy provides primary coverage for
Ellis’ liability. That question necessarily must be resolved by
the language of the respective policies, which establishes that
Liberty provided primary coverage for such liability and Zurich’s
coverage was excess only. See id.
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(emphasis added). These provisions, when read together, plainly
demonstrate the parties’ intent to indemnify each other for
uncovered losses arising from their own negligence but to look only
to their insurers, and not to each other, in the event of a covered
loss.2 Because Fields-Moore’s claims are indisputably covered by
insurance, Ellis’ indemnification promise does not apply.
Accordingly, Zurich’s policy provided only excess coverage.3 And,
because the settlement was within the limits of Liberty’s primary
coverage, Zurich breached no duty by refusing to indemnify AMG for
any part of the settlement, or to participate in the legal defense
of those claims, see Fireman’s Fund Ins. Co. v. Rairigh, 475 A.2d
509, 518 (Md. Ct. Spec. App. 1984) (“[T]he excess insurer is not
obligated to defend until the primary limits are exhausted.”).

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Ellis apparently maintained insurance in the amount of only
$1,000,000. The district court noted, however, that the parties
agree that this apparent failure to comply with the terms of the
PMA is not at issue since Fields-Moore’s claims amount to less
than $1,000,000.
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B.
Our holding that Ellis’ indemnification promise does not apply
to Fields-Moore’s suit forecloses all of Appellees’ claims except
the claim that Ellis breached its duty under the PMA to obtain
insurance that would provide primary coverage for any claims that
were also covered by AMG’s insurer. This claim fails for a
different reason, namely, that the PMA creates no such duty.
Article IV, on which Liberty relies, requires Ellis only to
“maintain Commercial General Liability Insurance in an amount not
less than $10,000,000, Combined Single Limit naming [AMG] and
Maritime Realty Corporation.” 4 J.A. 236. But, that same article
also requires AMG to obtain insurance for loss, damage or injury to
property or person that might arise out of the “occupancy,
management, operation or maintenance of the Property” covered by
the PMA. Id. at 235. The agreement is silent regarding which
insurance would be primary in the event that both covered a
particular claim.
III.
In sum, the district court erred in granting summary judgment
to Appellees and in denying summary judgment to Appellants.

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Accordingly, we reverse the district court order and remand for
entry of judgment in favor of Appellants.
REVERSED AND REMANDED

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