Matta v. Board of Education

WILNER, Judge. Three female students at the Surrattsville High School, through their respective mothers, brought suit in the Circuit Court for Prince George’s County against Prince George’s County, the county Board of Education, the county Superintendent of Schools, the principal of the Surrattsville High School, and a teacher at the high school, Enrique Matta. The gravamen of all three actions, which were combined in one complaint, was that Mr. Matta took, tried to take, or communicated a desire to take certain sexual liberties with the complaining students. Each child sought ²⁶⁶ compensatory damages of $250,000 and punitive damages of $500,000.

Md.Educ.Code Ann. § 4-105 provides, in relevant part, that a county board of education “shall carry comprehensive liability insurance to protect the board and its agents and employees” and that a board may fulfill that obligation by becoming “self-insured for at least $100,000 for each occurrence under the rules and regulations adopted by the State Insurance Commissioner____” If a board elects to self-insure, it must file the “terms and conditions of the self-insurance” with the State Insurance Commissioner. Those terms and conditions “shall conform with the terms and conditions of comprehensive liability insurance policies available in the private market” and are subject to the Commissioner’s approval. Section 4-104(d)(l) of the Education article further requires, in relevant part, that “[i]n any suit ... brought against a principal, teacher ... or other agent or employee of a county board by a parent or other claimant with respect to an action taken by the agent or employee, the board shall provide counsel for that individual if: (i) The action was taken in the performance of his duties, within the scope of his employment, and without malice; and (ii) The board determines that he was acting within his authorized official capacity in the incident.” The Prince George's County Board of Education is self-insured. Although it undertook to defend itself, the superintendent, and the principal in the suit filed by the students, the board declined to defend Matta or to provide him with counsel, apparently on the theory that the conduct charged to him was intentional and malicious rather than merely negligent, and thus was unauthorized and beyond the scope of his employment.

Matta thereupon filed this declaratory judgment action against the board, the superintendent, the principal, and the three plaintiff-students, seeking a declara ²⁶⁷ tion that Matta “was an insured covered by the policy of self-insurance issued by the [board of education]” and that the board owes Matta a defense in the tort action. No particular relief was requested against any of the other parties. With the complaint was a motion for summary judgment. The board, the superintendent, and the principal (to whom we shall henceforth collectively refer as the board) filed an answer to the complaint and, eventually, a cross-motion for summary judgment.

There were no exhibits or affidavits attached to the motions. After a brief hearing, the court granted the board’s cross-motion and entered a judgment declaring that the board was not obligated to provide either a defense or insurance coverage for Mr. Matta. From that order, Mr. Matta has appealed. 1 Matta’s argument is based principally on the rules laid down in Brohawn v. Transamerica Ins. Co., 276 Md. 396 , 347 A.2d 842 (1975).

In that case, as the result of an altercation in which Brohawn allegedly struck Shaffer and Friend, Brohawn was sued for both assault and negligence. Brohawn was insured by Transamerica; the policy obliged Transamerica to defend “any suit” against Brohawn alleging bodily injury, even if the allegations of the suit “are groundless, false or fraudulent,” but it specifically excluded from coverage acts committed by Brohawn “with intent to ²⁶⁸ cause injury....” Based in part on the allegations in the lawsuit by Shaffer and Friend and in part on the fact that Brohawn had pled guilty to a charge of assault flowing from the incident, Transamerica denied coverage and filed an action, prior to resolution of the tort case, seeking a declaratory judgment that it was not obliged to defend or indemnify Brohawn. The Court of Appeals addressed two issues: (1) was a declaratory judgment action, in advance of a resolution of the tort case,, an appropriate way to resolve the coverage dispute and (2) was there coverage? The answer to the first question, the Court held, depended on whether the coverage question was “independent and separable from the claims asserted in [the] pending suit” by the injured party. 276 Md. at 405 , 347 A.2d 842 .

Where, for example, the asserted lack of coverage arises from the insured’s failure to pay premiums on the policy or “to comply with contract provisions such as the cooperation or notification clause,” a declaratory judgment prior to trial of the tort case “would ordinarily be appropriate and should be granted.” Id. But where the coverage issue hinges on questions “which would be fully decided in pending tort actions,” such a proceeding is not appropriate. Id. at 405-06 , 347 A.2d 842 . As to the second question, the court opined, at 407-08, 347 A.2d 842 : “The obligation of an insurer to defend its insured under a contract provision such as here involved is determined by the allegations in the tort actions.

If the plaintiffs in the tort suits allege a claim covered by the policy, the insurer has a duty to defend. Even if a tort plaintiff does not allege facts which clearly bring the claim within or without the policy coverage, the insurer still must defend if there is a potentiality that the claim could be covered by the policy.” (Emphasis in original.) Because the tort action contained a claim of negligence and negligence was covered under the policy, the Court held ²⁶⁹ that the insurer had a duty to defend, even if the negligence claim was “groundless, false or fraudulent,” for that is what the contract provided. Matta seeks the same conclusion here. He urges that the tort action alleges negligence on his part and that there is at least a potentiality of coverage, even if the averment of negligence is “groundless, false or fraudulent.” There is a significant flaw in Matta’s argument.

In Brohawn , and in the line of cases following Brohawn , the Court was construing an insurance policy — a contract containing specific language delineating the insurer’s obligations. Throughout the Brohawn Opinion, the Court made clear that the issue, in terms of coverage, arose from the insurer’s “contractual obligation” or the insured’s “contractual right.” See also St. Paul Fire & Mar. Ins. v. Pryseski, 292 Md. 187, 193 , 438 A.2d 282 (1981); cf. Continental Casualty v. Board of Educ., 302 Md. 516 , 489 A.2d 536 (1985); Allstate Ins. Co. v. Atwood, 71 Md.App. 107 , 523 A.2d 1066 , cert. qranted 310 Md. 274 , 528 A.2d 1286 (1987); Harpy v. Nationwide Mutual Fire Ins., 76 Md.App. 474 , 545 A.2d 718 (1988).

There is no contract here. Whatever obligation the board has and, conversely, whatever right Matta has, must be drawn initially from the statute— §§ 4-104 and 4-105 — and then from the terms of the self-insurance. Although the analytical framework of Brohawn remains applicable — i.e., an examination of the tort action complaint to see if there is a potentiality of coverage — that potentiality must be drawn from the terms of the self-insurance authorized by the statute, not from the Brohawn Court’s construction of the Transamerica insurance policy. We made this same point in Washington Transit Authority v. Bullock, 68 Md.App. 20 , 509 A.2d 1217 , cert. denied 308 Md. 237 , 238 (1986).

There too we were dealing with a public entity that, under statutory authorization, had self-insured. And there, as here, although the statute set forth certain standards for the self-insurance, the record was barren as to what exactly the entity undertook to insure. Because there was no evidence as to what coverage was ²⁷⁰ afforded by the self-insurance, we concluded that the case could not properly be decided on that record. We have somewhat the same problem here.

As we indicated earlier, § 4-105(c) requires self-insurance to be in a minimum of $100,000 “under the rules and regulations adopted by the Insurance Commissioner.” The board must file with the Commissioner the “terms and conditions of the self-insurance.” Those terms and conditions are subject to the approval of the Commissioner and must “conform with the terms and conditions of comprehensive liability insurance policies available in the private market.” The record before the circuit court and before us does not contain (1) the rules and regulations of the Commissioner, (2) the terms and conditions of the self-insurance, (3) any indication of whether those terms and conditions were approved by the Commissioner, or (4) the terms and conditions of comprehensive liability policies available in the private market. 2 Thus, as in Bullock , we have no idea, and we refuse to speculate, as to what conduct was covered or excluded by the board’s self-insurance. We therefore cannot tell whether the conduct charged to Matta is, or is not, potentially covered. As the moving party, the board had the burden under Md. Rule 2-501 of showing that there was no genuine dispute of material fact and that it was entitled to judgment as a matter of law. On this record, it cannot be said to have met that