U.S. Court of Appeals for the 4^th Circuit

Insurance; hot-air balloon accident: Where two persons suffered “gruesome injuries” in a hot-air balloon accident, the district court did not err in holding that the policy’s coverage limit of $100,000 per balloon passenger was applicable, rather than the $1 million coverage limit applicable to non-passengers. The facts showed the persons were inside the balloon’s basket, or alighting from the basket, when they were injured, which made them passengers under the policy. T.H.E Insurance Company v. Davis, No. 21-2044 (filed Dec. 9, 2022).

Maryland Supreme Court

Insurance; coverage for coronavirus: Where a retail store argued that its policy was triggered by (1) the presence of coronavirus in the air and on surfaces of its retail stores or (2) the resulting loss of functional use of those stores during portions of the COVID-19 pandemic, the court disagreed. “Physical loss or damage” requires “tangible, physical changes to insured property.” Tapestry Inc. v. Factory Mutual Insurance Company, Misc. No. 1, Sept. Term, 2022 (filed Dec. 12, 2022).

Sanctions; indefinite suspension: Where an immigration attorney failed to file pleadings in two immigration proceedings, his conduct violated multiple provisions of the Maryland Attorneys’ Rules of Professional Conduct, or MARPC. He was indefinitely suspended from the practice of law, with the right to apply for reinstatement after 18 months. Attorney Grievance Commission of Maryland v. Taniform, Misc. Docket AG No. 40, Sept. Term, 2021 (filed Dec. 16, 2022).

U.S. Court of Appeals for the 4^th Circuit

Insurance

Hot-air balloon accident

BOTTOM LINE: Where two persons suffered “gruesome injuries” in a hot-air balloon accident, the district court did not err in holding that the policy’s coverage limit of $100,000 per balloon passenger was applicable, rather than the $1 million coverage limit applicable to non-passengers. The facts showed the persons were inside the balloon’s basket, or alighting from the basket, when they were injured, which made them passengers under the policy.

CASE: T.H.E Insurance Company v. Davis, No. 21-2044 (filed Dec. 9, 2022) (Judges KING, Rushing, Traxler).

FACTS: Melyndia Davis and Robert Spencer sued three defendants for the gruesome injuries Davis and Spencer sustained in the balloon accident. T.H.E. Insurance Company then initiated insurance coverage proceedings, seeking a ruling that the policy’s coverage limit of $100,000 per balloon passenger is applicable to Davis and Spencer, rather than the $1,000,000 coverage limit applicable to non-passengers.

Davis and Spencer lodged counterclaims for contractual and statutory bad faith. The district court awarded summary judgment in favor of the insurer’s contention. It also rejected both of Davis and Spencer’s bad faith claims.

LAW: Davis and Spencer first argue that the settlement agreement made and executed in the underlying damages lawsuit resolved the coverage issue presented in these coverage proceedings. In Maryland, “the elements of res judicata are: (1) that the parties in the present litigation are the same or in privity with the parties in the earlier dispute; (2) that the claim presented in the current action is identical to the one determined in the prior adjudication; and (3) that there has been a final judgment on the merits.”

The court is satisfied that res judicata does not bar the coverage issue pursued by the insurer in these proceedings. First off, the insurer was not a party in the damages lawsuit. And “although the [settlement agreement] extinguished Davis and Spencer’s claims against the Insureds, it did not resolve the separate question of the extent of coverage under the Policy.”

Davis and Spencer next maintain that, because they were not balloon “passengers” at the time of their injuries, the coverage limit of $1,000,000 per occurrence — applies here. The policy defines a “[p]assenger” as “any person, other than the ‘pilot in command’, in or entering the ‘Hot Air Balloon’ for the purpose of riding therein or alighting therefrom following a flight or attempted flight, or a crew member.”

On this record — and accepting the facts in the light most favorable to Davis and Spencer — the district court correctly ruled that Davis and Spencer were inside the balloon’s basket when they were injured. As such, Davis and Spencer were “passengers” under the policy and the limit of $100,000 per passenger applies.

Davis and Spencer contend that an expert witness report by a professional engineer named Sommer, who was trained and experienced in aircraft accident investigations, creates a genuine dispute of material fact as to whether they were “passengers” at the time of their injuries. The district court did not abuse its discretion in striking the Sommer report.

There is no “reliable foundation” — on this record or otherwise — that supports the Sommer report’s flawed assumption that Davis and Spencer were outside the balloon’s basket at the time of their injuries. Moreover, even accepting the Sommer report’s assumption that Davis and Spencer were outside the balloon’s basket at the time of their injuries, they would still be “passengers” under the policy, in that they were “alighting [from the balloon] following a flight.”

Davis and Spencer’s contractual and statutory bad faith claims rest on the notion that the $1,000,000 per occurrence applies to their injury claims. Because the circuit court did not err in ruling that $100,000 each applies in this dispute, however, and because the insurer repeatedly offered $100,000 per passenger to settle the damages lawsuit, it “did not fail to settle the claims for an amount within the applicable limits.” The court thus did not err in awarding judgment to the insurer on the bad faith claims.

Affirmed.

Maryland Supreme Court

Insurance

Coverage for coronavirus

BOTTOM LINE: Where a retail store argued that its policy was triggered by (1) the presence of coronavirus in the air and on surfaces of its retail stores or (2) the resulting loss of functional use of those stores during portions of the COVID-19 pandemic, the court disagreed. “Physical loss or damage” requires “tangible, physical changes to insured property.”

CASE: Tapestry Inc. v. Factory Mutual Insurance Company, Misc. No. 1, Sept. Term, 2022 (filed Dec. 12, 2022) (Judges FADER, Watts, Hotten, Booth, Biran, Gould, Eaves).

FACTS: A question certified to this court by the Maryland federal district court asks whether an insurance policy that “covers property . . . against ALL RISKS OF PHYSICAL LOSS OR DAMAGE, except as hereinafter excluded,” and further covers “TIME ELEMENT” losses “directly resulting from physical loss or damage of the type insured,” is triggered by (1) the presence of coronavirus in the air and on surfaces on the premises of the insured’s retail stores or (2) the resulting loss of functional use of those stores during portions of the COVID-19 pandemic.

LAW: From their dictionary definitions, the court gleans that “physical loss or damage” to covered property must involve tangible, concrete and material harm to the property or a deprivation of possession of the property. That conclusion supports the insurer’s position that “physical loss or damage” requires “tangible, physical changes to insured property.”

Tapestry argues that the plain meaning of “physical loss or damage” also embraces, in addition to a loss of possession of property, “a functional loss of use of property due to the presence of an external force[.]” In doing so, however, Tapestry fails to engage with the common meanings of the relevant terms. Instead, Tapestry merely states its preferred interpretation, claims that “[d]ictionary definitions of the relevant terms . . . demonstrate this” and then drops a footnote providing a single definition for each of the three terms. The definitions, all from the Oxford English Dictionary and none offering apparent support for Tapestry’s proposed expansion to “functional loss of use,” are unaccompanied by any analysis or further exposition.

Several aspects of the policies confirm the interpretation of “physical loss or damage” as not encompassing a functional loss of use of the property. By contrast, the court finds no other provisions of the policies that support Tapestry’s interpretation of “physical loss or damage” as extending to a temporary, functional loss of use of the property.

Tapestry makes three different arguments for why the allegations in the complaint concerning its losses resulting from the presence of coronavirus on its property constitute “physical loss or damage.” First, Tapestry contends that the temporary, functional loss of use of covered property itself constitutes “physical loss or damage.” As explained above, the court has reached a different conclusion.

Second, Tapestry argues that coronavirus damaged the air in its covered properties, which constitutes “physical loss or damage.” The court is not aware of any reported

decisions that have treated damage to air itself, as opposed to loss or damage to property resulting from air contamination, as property damage. But even assuming damage to air could otherwise trigger coverage under the policies, the allegations of the complaint do not support a claim that the air in Tapestry’s stores was “damaged” in a way that triggers coverage under the policies.

Third, Tapestry’s allegation that coronavirus particles “altered” objects like doorknobs and purses into “vectors of disease” by landing on, adhering to, and being subject to becoming dislodged from them does not satisfy the requirement of “physical loss or damage.”

The court notes that its interpretation of the policy language and application of that interpretation to Tapestry’s claim is in accord with the overwhelming majority of reported decisions addressing coronavirus-related insurance claims under first-party commercial property insurance policies. Tapestry points to three relatively recent appellate decisions that have reached a contrary conclusion. Setting aside differences in the underlying policies and allegations at issue in those three cases, the court is ultimately persuaded more by the majority of other appellate decisions.

Tapestry also relies on a number of decisions, many unreported, from other jurisdictions involving other hazardous substances. Some of those cases are distinguishable on one or more grounds. However, to the extent they are not materially distinguishable, the court finds the analyses in those cases unpersuasive, at least as applied to the policies and the allegations of the complaint.

Certified question of law answered.

Sanctions

Indefinite suspension

BOTTOM LINE: Where an immigration attorney failed to file pleadings in two immigration proceedings, his conduct violated multiple provisions of the Maryland Attorneys’ Rules of Professional Conduct, or MARPC. He was indefinitely suspended from the practice of law, with the right to apply for reinstatement after 18 months.

CASE: Attorney Grievance Commission of Maryland v. Taniform, Misc. Docket AG No. 40, Sept. Term, 2021 (filed Dec. 16, 2022) (Judges Fader, Watts, Hotten, Biran, GOULD, Eaves) (Judge Booth, concurs).

FACTS: The Attorney Grievance Commission of Maryland, acting through bar counsel, filed a petition for disciplinary or remedial action against Terence Taniform. The petition alleged that Mr. Taniform violated multiple provisions of MARPC and also violated the Professional Conduct for Practitioners governing federal immigration proceedings set forth in 8 C.F.R. § 1003.102.

On July 1, 2022, the hearing judge issued a written statement containing findings of fact and conclusions of law, concluding by clear and convincing evidence that Mr. Taniform violated multiple provisions of MARPC.

LAW: Mr. Taniform excepts to the court’s findings that he (1) made “knowing and intentional misrepresentations” to Mr. Fon and Ms. Fongum that he had filed the motion to reopen the case and (2) misrepresented to Ms. Hargrove that he would send her a copy of the motion to reopen the case. He also excepts to the hearing judge’s finding that he was not credible.

Despite his representations to the contrary, Mr. Taniform had to have known that he had never signed a “skeletal” motion, never prepared and filed a supplemental motion, never called the BIA to check on the status of the matter and never had any basis for leading Mr. Fon to believe that he was on top of the matter. Accordingly, the court overrules Mr. Taniform’s exception to the hearing judge’s finding that he made multiple misrepresentations in the Fon matter and that his testimony was not credible.

Mr. Taniform excepts to the hearing judge’s finding that “the Respondent knowingly and intentionally misrepresented to Felix that Clovis’s appeal and his application for parole were going well.” According to Mr. Taniform, although his statements were inaccurate and misleading, they were not made for personal gain. He contends that he was justified in making these statements because he intended to file the brief late and ask the court’s permission to accept it late. For self-evident reasons, Mr. Taniform’s attempt to rationalize his actions in this manner only substantiates the hearing judge’s finding.

Mr. Taniform excepts to the hearing judge’s finding that he made a knowingly false and intentionally misleading statement to bar counsel by attempting to rationalize his misrepresentations to Ms. Fongum and Ms. Hargrove. The court finds that there is ample evidence to support the hearing judge’s finding that Mr. Taniform intentionally and knowingly misled bar counsel.

Mr. Taniform excepts to the hearing judge’s failure to find the following mitigating factors: (1) an absence of a dishonest or selfish motive, (2) timely effort to make restitution, (3) cooperative attitude towards the attorney disciplinary proceeding, (4) character or reputation and (5) remorse. Given the record, the hearing judge was well within her discretion when she declined to find these additional mitigating factors.

The hearing judge found that bar counsel proved by clear and convincing evidence:

(1) a dishonest or selfish motive, (2) a pattern of misconduct, and (3) vulnerability of the victims. Although Mr. Taniform excepts to each of these findings, the court finds each supported by the record.

The hearing judge found by clear and convincing evidence that Mr. Taniform violated MARPC 1.1, 1.3, 1.4(a) and (b), 1.15, 1.16(d), 4.1, 8.1(a) and (b), and 8.4(a), (c) and (d), and Maryland Rule 19-407. Mr. Taniform excepts to the hearing judge’s conclusion that he violated MARPC 1.15, 1.16(d), 4.1, 8.1(a) and (b) and 8.4(c). The court overrules each exception.

Based on the relevant facts and circumstances, and guided by prior decisions in comparable contexts, the court imposes an indefinite suspension, with the right to apply for reinstatement after 18 months.

It is so ordered.

CONCUR: I write separately to express my views on an issue that is not presented to the court because neither party chose to raise it, and it is therefore waived: how bar counsel should file charges when another jurisdiction’s professional rules are required to be applied under Rule 8.5(b), how the charges should be presented to the hearing judge and how the hearing judge should consider and apply them.