National Union Fire Insurance Co. of Pittsburgh v. Fund for Animals, Inc.

Greene, J. In this case, Petitioner, National Union Fire Insurance Company of Pittsburgh, Pa. (“National Union”), challenges the Court of Special Appeals’ holding that Respondent, the Fund for Animals, Inc. (“FFA”), did not cause actual prejudice to National Union as a result of providing late notice of a claim against FFA under a liability insurance policy issued by National Union to FFA. See Md. Code Ann., INS. § 19-110 (1997, 2011 Repl. Vol., 2016 Supp.).

This case relates to three actions: (1) the Endangered Species Act case (“ESA Case”), where FFA and other plaintiffs sued Ringling Brothers and its owner, Feld Entertainment, Inc. (“Feld”) for the mistreatment of Asian elephants in the Ringling Brothers’ Circus; (2) the Racketeer Influenced and Corrupt Organizations Act case ⁴³⁸ (“RICO Case”), where Feld sued FFA and the other plaintiffs named in the ESA Case for improper conduct, including paying a witness to testify in order to establish standing to sue Feld in the ESA Case and concealing those payments during discovery; and (3) the Coverage Case, where FFA sued National Union, its insurer, for not providing coverage to FFA when it was sued by Feld in the RICO Case. This appeal stems from the coverage dispute. The findings in the ESA Case were adverse to FFA and could have been used against it in the RICO case; thus, prejudicing FFA’s insurer, National Union. FFA argues that although notice of the RICO claim was late under the policy, National Union, at best, could have “monitored” the ESA Case and could not have intervened in, impacted, or influenced the ESA Case.

Moreover, National Union was notified of the RICO Case before settlement, mediation, or a trial had taken place in the RICO action. Therefore, late notification of the RICO Case 1 was not prejudicial to National Union. Accordingly, as a matter of law, National Union was not prejudiced in investigating, settling, or defending the RICO claim as a result of any delay in receiving notice of claims brought against the insured. Therefore, we affirm the judgment of the Court of Special Appeals.

FACTUAL AND PROCEDURAL BACKGROUND Background The relevant facts are taken from evidence and testimony presented at trial. FFA, a nonprofit organization dedicated to ⁴³⁹ animal protection issues and an affiliate of the Humane Society of the United States (“HSUS”), was insured under a liability policy issued by National Union. The insurance was purchased to protect HSUS and its affiliates against the risks of lawsuits and claims made against them. National Union issued a “Not-For-Profit Individual and Organization Insurance Policy” to HSUS, which was in effect from January 7, 2006 through June 8, 2008 (“the 2007 Policy”).

This was a “elaims-made-and-reported-policy.” 2 A “Claim” is defined in the policy to mean “(1) a written demand for monetary relief or (2) a civil ... proceeding for monetary ... relief which is commenced by: (i) service of a complaint or similar pleading[.]” ¶ 2. (b)(1)—(2)(i). The “Notice/Claim Reporting Provisions” section under Clause 7 of the insurance policy states “[t]he Insureds shall, as a condition precedent to the obligations of the Insurer under this policy, give written notice to the Insurer of any Claim made against an Insured as soon as practicable and either: (1) anytime during the Policy Year ... or (2) within 30 days after the end of the Policy Year ... as long as such Claim is reported no later than 30 days after the date such claim was first made against an insured.” ¶ 7.(a)(l)-(2). “A Claim shall be considered to have been first made against an Insured when written notice of such Claim is received by any Insured[.]” ¶ 7. Further, pursuant to the policy, FFA was responsible for defending itself, and National Union had a duty to advance defense costs.

The insured’s right to tender its defense i.e., ⁴⁴⁰ transferring the obligation of the defense, and all costs associated with the insurer terminates if not exercised within 30 days of the date the claim is first made pursuant to Clause 7. ¶¶ 1 & 8. “Provided that the Insureds [including FFA] have complied with the foregoing, the Insurer [National Union] shall be obligated to assume the defense of the Claim ... [o]nce the defense has been so tendered, the Insured [FFA] shall have the right effectively to associate with the Insurer [National Union] in the defense of such Claim, including, but not limited to negotiating a settlement.” ¶ 8. Although, the coverage dispute relates to both the ESA Case and the RICO Case, we primarily address the Coverage Case in this appeal. The other two cases are relevant because they form the basis as to why National Union believes it was actually prejudiced, enabling it to disclaim coverage under its policy. The ESA Case is a ease in which FFA was the plaintiff and adverse factual findings and a judgment were entered against FFA.

Those adverse findings could have been raised against FFA in the RICO Case on grounds of collateral estoppel. National Union had no duty to defend FFA in the ESA Case because National Union provided defense coverage and FFA was acting as a plaintiff in the ESA Case. Therefore, National Union could not have affected the outcome of the ESA proceedings. In the RICO Case, FFA was sued by Feld, a defendant in the ESA Case, for misconduct that allegedly occurred during the prosecution of the ESA Case.

In the Coverage Case, FFA sued its insurer, National Union, for failing to provide coverage to it. National Union disclaimed coverage on the grounds that it received late notice of the RICO Case. It further claimed that had National Union known earlier it could have stepped in and “monitored” or advised FFA in the ESA Case. Intervention, National Union claims, would have prevented the adverse factual findings which prejudiced FFA’s defense in the RICO Case.

In the ESA Case, FFA, an organizational plaintiff, along with other organizational plaintiffs and an individual plaintiff, Thomas Rider, sued Ringling Brothers and its owner, Feld. While the ESA Case was pending, Feld brought the RICO ⁴⁴¹ Case against FFA and the other organizational plaintiffs for allegedly bribing the individual plaintiff to falsely testify and commit other criminal acts, in order to establish standing to sue Feld. Feld sought to recover damages in the form of attorneys’ fees and costs incurred in defending the ESA Case. FFA did not notify National Union of the RICO claim until over two years after the claim had been filed.

By that time, the court in the ESA Case had ruled in favor of the defendant, Feld, on the ground that the ESA organizational plaintiffs, including FFA, lacked standing. The court also made several factual findings, including that the organizational plaintiffs had paid the individual plaintiff for testimony that was false and that those payments were concealed during discovery. National Union denied coverage on the grounds that FFA failed to provide timely notice. Subsequently, FFA brought the Coverage Case against National Union, which in turn defended on the grounds that it was prejudiced by the late notice.

National Union claimed actual prejudice because it believed FFA was precluded, in the RICO Case, from contesting many of the facts found by the court in the ESA Case as those facts undermined any defense FFA might have raised. The ESA Case (Not Covered by the 2007 Policy) The ESA Case was brought in 2000 in the United States District Court for the District of Columbia before the Honorable Emmet G. Sullivan. The ESA Case was not covered by the 2007 Policy because the Policy provided coverage to FFA in defense of claims made against it by another party, not in the case where FFA was the plaintiff. FFA, the American Society for the Prevention of Cruelty to Animals (“ASPCA”), the Animal Welfare Institute (“AWI”), and Thomas Rider sued Feld and Ringling Brothers for declaratory and injunc-tive relief, alleging Ringling Brothers’ mistreated Asian elephants in its circus training techniques, violating the Endangered Species Act, 16 U.S.C. § 1531 et seq.

The suit was brought under § 1540(g), the citizen-suit provision of the ESA, which requires standing under the “case or controversy” provision of Article III of the United States ⁴⁴² Constitution, meaning at least one plaintiff must make a showing: (1) that the plaintiffs have suffered an “injury in fact”—an invasion of a judicially cognizable interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) that there be a causal connection between the injury and the conduct complained of—the injury must be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court; and (3) that it be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Bennett v. Spear, 520 U.S. 154, 167 , 117 S.Ct. 1154, 1163 , 137 L.Ed.2d 281, 298 (1997) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 , 112 S.Ct. 2130, 2136 , 119 L.Ed.2d 351, 364 (1992)). Mr. Rider alleged he was emotionally attached to the elephants because he had worked for Ringling Brothers for two years, tended the elephant barns, worked as a “handler”, and referred to them as his “girls.” He claimed that he had witnessed their mistreatment by the Ringling Brothers’ employees. Further, he explained that he wished to visit the elephants again and work with them, but could not because he feared he would experience aesthetic and emotional injury from witnessing their scars and behavioral tics.

Feld filed a motion to dismiss for lack of Article III standing asserting Mr. Rider did not suffer any cognizable and redressable injury and thus the plaintiffs, including FFA, could not establish standing. The district court granted the motion to dismiss. That decision was appealed to the United States Court of Appeals for the District of Columbia Circuit, which reversed and held there was a cognizable and redressa-ble injury. 3 ASPCA v. Ringling Bros. and Barnum & Bailey Circus, 317 F.3d 334 (D.C. Cir. 2003). ⁴⁴³ In August 2007, Feld filed the RICO Case (discussed previously) as a separate action against FFA and the other organizational plaintiffs. While the RICO Case was pending, the ESA Case was tried as a bench trial and lasted for six weeks, from February through March of 2009.

In December of 2009, the district court entered judgment in favor of Feld and held that the plaintiffs failed to establish Article III standing. Accordingly, the court determined that it lacked jurisdiction and declined to reach the merits of whether Feld violated the ESA. ASPCA v. Feld Entertainment, Inc., 677 F.Supp.2d 55, 91, 97-98 (D.D.C. 2009). The court made findings of fact and rejected Mr. Rider’s testimony, concluding he was “essentially a paid plaintiff and fact witness who is not credible.” 677 F.Supp.2d at 67 .

The court also found that since March of 2000, Mr. Rider’s sole source of income was coming from payments made by animal rights advocates, including the organizational plaintiffs. 677 F.Supp.2d at 72 . It was determined that payments were made directly to him from the law firm representing the plaintiffs, Meyer, Glitzenstein & Crystal (“MGC”) and indirectly from grants from the Wildlife Advocacy Project (“WAP”), a non-profit run by two partners in MGC. 677 F.Supp.2d at 74 . The court found: [T]he primary purpose is to keep Mr. Rider involved with the litigation, because he is the only plaintiff who alleges a personal and emotional attachment to the elephants and an aesthetic injury based on the alleged mistreatment he claims to have witnessed while working for [Feld]. 677 F.Supp.2d at 79 . Further, the court determined that the plaintiffs used the United States mail system to make payments. 677 F.Supp.2d at 77 .

Moreover, those payments “were not disclosed initially in discovery, by both omissions and affirmatively false statements.” 677 F.Supp,2d at 88. (As discussed below, these findings are all relevant to the RICO Case ⁴⁴⁴ because they form the basis for a violation of the RICO statute, and mail and wire fraud.). On appeal, the Court of Appeals for the District of Columbia Circuit affirmed the district court’s findings. See ASPCA v. Feld, 659 F.3d 18 (D.C. Cir. 2011).

In March of 2013, Judge Sullivan granted Feld’s motion as a prevailing party for attorneys’ fees (filed in April 2012), under a fee-shifting provision of the ESA. 16 U.S.C. § 1540 (g)(4). He further found that the ESA Case was “meritless, frivolous, and vexatious” and directed the parties to submit recommendations for further proceedings to determine the amount of attorneys’ fees Feld had incurred. The RICO Case (Covered by the 2007 Policy) As mentioned in the above discussion, during the ESA case, Feld filed the RICO Case in the United States District Court for the District of Columbia in August of 2007 as a separate action naming the organizational plaintiffs from the ESA Case, including FFA, as defendants. Feld alleged that the RICO defendants engaged in illegal acts in the ESA Case, including paying Mr. Rider over $100,000 to falsely testify to establish emotional injury from the alleged mistreatment of elephants and attempting to conceal payments that were in the form of bribes, illegal gratuities, mail fraud, wire fraud, money laundering, and obstruction of justice.

Feld sought damages in attorneys’ fees and costs incurred in defending the ESA Case. The complaint and summons in the RICO Case were served on FFA in September 2007. However, National Union was not notified by FFA of the RICO Case when the complaint was served, nor at any time during the 2007 Policy period (before June 8, 2008). In November 2007, Judge Sullivan, in the RICO Case, granted the defendants’ “Motion to Temporarily Stay All Proceedings” pending the resolution of the ESA Case and indicated that [gjiven that the ESA Action is still ongoing, and because [Feld] has no choice but to continue to defend the ESA suit regardless of the outcome of its RICO claim, [Feld’s] dam ⁴⁴⁵ ages [in the form of attorneys’ fees and costs incurred in defending the ESA Case] are unascertainable at this point.

Feld Entertainment, Inc. v. ASPCA, 528 F.Supp.2d 1 , 4 (D.D.C. 2007). It was not until January 15, 2010 that the court lifted the stay in the RICO Case. This was approximately one month after Feld had prevailed in the ESA Case. On March 1, 2010, Roger Kindler, general counsel for HSUS and its affiliates (including FFA) gave their insurance broker notice of Feld’s amended complaint in the RICO Case.

The letter stated HSUS and its affiliates demand coverage under the National Union Policy for the 2010 term year (“the 2010 Policy”), which was substantially similar to the 2007 Policy (FFA was an “Additional Insured” on the 2010 Policy as well as the 2007 Policy). The insurance broker forwarded the notice and copy of the amended complaint to National Union. National Union’s claims administrator, Chartis, requested the original complaint in the RICO Case. Mr. Kindler forwarded a copy of the original complaint to Chartis and also notified it that the RICO Case had been stayed by the district court pending the outcome of the ESA Case and that the district court had scheduled mediation for both cases in June.

On May 26, 2010, Chartis sent a letter to HSUS and FFA disclaiming coverage both under the 2010 and 2007 Policies because the RICO claim was made against FFA in 2007 and notice was not given during the 2007 Policy term (from January 7, 2006 through June 8, 2008). Mr. Kindler responded, on June 16, 2010, and contested the disclaimer. He explained that there was “on-going, formal mediation in the District of Columbia involving all parties, that ha[d] the potential of resolving the nest of claims between Feld [ ] and the charities and individuals named in the Amended RICO Complaint” and “[i]f the mediation fails, the parties and their insurance carriers [were] looking forward to, it is safe to say, years of intense litigation and the associated costs. Chartis should not be sitting on the sidelines.” National Union did not respond and chose not to get involved in the RICO Case.

FFA hired attorneys, engaged in mediation, filed a motion to dismiss the amended RICO complaint, pursued (unsuccessfully) an inter ⁴⁴⁶ locutory appeal from the denial of the motion to dismiss, and was involved in discovery for over six months. In March of 2013, Judge Sullivan granted Feld’s motion for attorneys’ fees in the ESA Case and directed the parties to submit recommendations for the appropriate amount of fees and to determine whether further proceedings were necessary. In early 2014, FFA and the other organizational defendants in the RICO Case and Feld engaged in settlement negotiations. In May 2014, Feld settled its claim for $15.75 million.

In addition, Feld agreed to dismiss, with prejudice, the RICO Case as well as the pending claim for attorneys’ fees in the ESA Case. FFA’s share of the settlement responsibility was approximately $2.54 million. The Coverage Case Before Judge Sullivan ruled on Feld’s motion for attorneys’ fees in the ESA Case and while the RICO Case was pending, FFA filed suit (“Coverage Case”), from which this appeal stems, against National Union in the Circuit Court for Montgomery County on September 6, 2012. FFA alleged that National Union breached the 2007 Policy by disclaiming coverage in the RICO Case.

National Union argued that Virginia law applied, which provided that late notice alone was sufficient to support disclaiming coverage and moved for summary judgment in July of 2014. On December 11, 2014, the court denied the motion and ruled that Maryland law applied. Further, the court explained that under § 19-110, to disclaim coverage based on late notice of the RICO Case, National Union had to prove by a preponderance of the evidence that it suffered actual prejudice due to the late notice. See § 19-110.

In addition, because National Union did not present evidence in support of its motion to show that, “had [it] been given earlier notice, it would have joined the ESA trial team and changed the result of that case,” there was a genuine dispute of material fact as to the issue of actual prejudice. National Union’s motion for reconsideration was also denied. ⁴⁴⁷ A four-day jury trial took place beginning on January 12, 2015. FFA presented four witnesses: Michael Markarian, the president of FFA; George Wade, the CFO of HSUS; Roger Kindler, general counsel for HSUS; Roger Zuckerman, a partner at Zuckerman Spaeder, the law firm that represented FFA in the RICO Case. Mr. Markarian testified that FFA did not notify National Union of the RICO Case when it was filed in 2007 because they viewed the suit as an “intimidation tactic.” They “did not view it as a serious threat” because the RICO Case was stayed almost immediately after the filing.

Mr. Kindler testified as to discussions with Mr. Markarian and MGC, the law firm representing the plaintiffs in the ESA case, in 2007. He indicated that when the RICO Case was filed, there was a belief that it was filed as a “litigation tactic” in Feld’s defense of the ESA Case, not as a “substantive suit.” Moreover, he believed, “you save your insurance until you need it” and FFA did not need the insurance in 2007. Mr. Zuckerman testified as to the decisions made by the firm in defending and settling the RICO Case. The lawyers believed FFA had a reasonable chance of prevailing, but the potential damages were too great to justify risking trial, and “the ESA [Cjase ... had virtually no impact on the settlement decision [in the RICO case].” He and others at his firm dedicated a large amount of time to researching collateral estoppel and concluded it would not preclude FFA from litigating facts decided against it in the ESA Case.

At the close of FFA’s coverage case, National Union moved for judgment on the grounds that the evidence presented by FFA proved National Union suffered actual prejudice as a matter of law and FFA had failed to prove its damages with reasonable certainty. The court reserved its ruling on the motion until the close of all the evidence. Next, National Union called its sole witness, Maureen Con-boy, the assistant vice-president for AIG Claims, Inc. (formerly Chartis), and the individual who supervised litigation. Ms. Conboy testified that National Union “lost the opportunity to participate in the decision to stay the [RICO Case,] ... to monitor the ESA [Case,] and to try to settle the stayed [RICO ⁴⁴⁸ Case] before Judge Sullivan made his findings in December of 2009 and before Feld incurred another 11 million or so dollars in fees in the ESA [Case] during that period when [National Union] d[id not] know anything about this.” She mentioned that if the notice was timely, National Union could have assigned an attorney to represent FFA in the RICO Case and could have collaborated with FFA lawyers representing FFA in the ESA Case.

On cross-examination, Conboy conceded that National Union could not have appointed counsel to represent FFA in the ESA Case. Rather, they could have had panel counsel, a firm chosen by the insurer, enter an appearance in the RICO Case and “monitor” the ESA Case. At the close of evidence, National Union renewed its motion for judgment and argued it suffered actual prejudice as a matter of law, referencing cases under Maryland law holding that actual prejudice exists as a matter of law when there was no timely notice of the claim until after a verdict or judgment had been entered. National Union argued that here, there was no notice of the RICO Case until after judgment was entered in the ESA Case.

Further, National Union contended that it did not matter that the judgment in question was entered in the ESA Case, and not in the RICO Case, because the damages Feld sought in the RICO Case were fees incurred in defending the ESA Case and, under collateral estoppel, Judge Sullivan’s factual findings in the ESA Case were preclusive of relitigation of certain issues. Thus, National Union posited, FFA’s defense in the RICO Case was substantially impacted by the adverse factual findings made in the ESA Case. FFA responded that National Union waived the collateral estoppel argument by not raising it in its answer and, regardless, the doctrine would not apply to Judge Sullivan’s factual findings in the ESA Case because they were not necessary to the judgment in that case. FFA also noted that because Mr. Zucker-man testified that the firm’s decision to settle the RICO Case was not predicated on a concern about the preclusive effect of findings in the ESA Case, it was a jury question whether the defense of the RICO Case was impaired by the judgment in the ESA Case.

Thus, FFA argued that prejudice as a matter ⁴⁴⁹ of law did not exist and under Maryland law the issue had to be submitted to a jury. In granting National Union’s motion, the Circuit Court for Montgomery County ruled that the factual findings from the ESA Case—(1) that “Rider’s testimony was purchased by [the ESA plaintiffs, including FFA]”; (2) that FFA “had lied in discovery, and/or at the very least concealed evidence of those payments”; and (3) that FFA tried to “disguise the payments [to Rider] ... as payments for media services”—were “material and relevant to the [standing] issue before [Judge Sullivan in the ESA Case]” and were the basis for the judgment entered in that case. Therefore, the Circuit Court concluded that these facts were “finally determined” in the ESA Case. FFA had the opportunity to “fully litigate those issues” and thus, collateral estoppel in a trial in the RICO Case would preclude FFA from contesting those same facts and FFA would be bound by them.

Those facts would be significantly detrimental to FFA’s defense in the RICO Case. The Circuit Court further rejected FFA’s argument that collateral estop-pel was waived and concluded, in the alternative, that even if collateral estoppel did not apply in the RICO Case and factual findings in the ESA Case would not be binding on FFA, the findings necessarily would create “a substantial problem in [the RICO Case] for [National Union] ... in terms of evaluating the settlement of [the RICO Case].” The court finally concluded that Judge Sullivan’s findings in the ESA Case would drive up the settlement value of the RICO Case, thereby prejudicing National Union, as a matter of law. On March 12, 2015, the Circuit Court for Montgomery County entered judgment in favor of National Union. FFA timely appealed to the Court of Special Appeals.

The Court of Special Appeals reversed the judgment of the Circuit Court and remanded the case to the Circuit Court. The intermediate appellate court noted that if FFA had moved for judgment the court would have directed the Circuit Court to enter judgment in favor of FFA on liability. Further, if FFA did move for judgment on remand the trial court should enter judgment in FFA’s favor. The Court of Special Appeals held: ⁴⁵⁰ In this ease, we hold that when an insured gives late notice and during the period of delay in notification the insured’s defense becomes impaired, to the actual prejudice of the insurer, the insurer may disclaim coverage only if there is a causal link between the late notice and the prejudice.

Fund for Animals, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA., 226 Md.App, 644, 647, 130 A.3d 1165 , 1167 (2016). National Union filed a petition for writ of certiorari and FFA filed a cross-petition in this Court. We granted the Petition for Certiorari to answer the following questions: 1.

Did [the Court of Special Appeals] err in holding that the actual prejudice standard in Insurance Art. § 19-110 requires an insurer to prove that, had it received timely notice, the outcome would have been different? 2. Did [the Court of Special Appeals] exceed its authority by instructing the trial court on remand to permit and grant a belated motion for judgment, when such a motion was never filed at the time of trial? We also granted the cross-petition for writ of certiorari to answer the following questions: 1. Did Petitioner waive the affirmative defense of collateral estoppel by failing to plead that defense in its answer or mention it during discovery? 2.

Does collateral estoppel apply to the findings made in the Endangered Species Act case? Nat’l Union Fire Ins. Co. v. Fund for Animals, 448 Md. 29 , 136 A.3d 816 (2016). We shall hold that in order to disclaim coverage under § 19-110, an insurer must show, by a preponderance of the evidence, that the delay in giving notice resulted in actual prejudice to the insurer. “[T]he statute applies to require [the insurer] to show how it was prejudiced by [the insured’s] late-delivered notice in investigating, settling, or defending of the ... actions.” Sherwood Brands, Inc., 418 Md. at 331, 13 A.3d at 1287.

In other words, the burden is on the insurer to ⁴⁵¹ establish that the breach or failure to give timely notice resulted in actual prejudice to the insurer. In addition, the actual prejudice element requires that the insurer show that the harm to the insurer from the lack of required notice is more than theory or conjecture. Here, National Union was not able to produce sufficient evidence of the impairment of its defense as a result of National Union receiving late notice of the RICO claim. Although the application of collateral estoppel would prejudice National Union, it could not show that it was the late notice of the RICO claim that resulted in actual prejudice because the outcome of the factual findings would not have changed had National Union been notified of the RICO Case earlier.

That is so because National Union had no right to intervene in the ESA Case or affect its outcome. STANDARD OF REVIEW National Union’s motion for judgment as a matter of law, on the issue of actual prejudice, is reviewed under a de novo standard and without deference given to the lower court. District of Columbia v. Singleton, 425 Md. 398, 406-07 , 41 A.3d 717, 721-22 (2012); Thomas v. Panco Mgmt. of Md., LLC, 423 Md. 387, 393-94 , 31 A.3d 583, 587 (2011) (“We review the trial court’s grant of defendants’ motion for judgment de novo, considering the evidence and reasonable inferences drawn from the evidence in the light most favorable to the non-moving party.” (citing Md. Rule 2-519)). Statutory interpretation of § 19-110 is also reviewed de novo.

Allen v. State, 440 Md. 643, 667 , 103 A.3d 700, 714 (2014). Furthermore, an application of collateral estoppel “is a legal conclusion that this Court reviews de novo.” Garrity v. Md. State Bd. of Plumbing, 447 Md. 359, 368 , 135 A.3d 452, 458 (2016). See also Elec. Gen.

Corp. v. Labonte, 229 Md.App, 187, 202, 144 A.3d 856, 865 (2016). As for the Court of Special Appeals’ decision to consider an alleged “unpreserved issue,” this Court reviews that judgment under a deferential abuse of discretion standard. Jones v. State, 379 Md. 704, 715 , 843 A.2d 778 , 785 ⁴⁵² (2004). “[W]e respect the judgment of the Court of Special Appeals in determining, whether it needed to consider the issue for the proper execution of justice and unless upon our review that court abused its discretion under the Rule, we will not substitute our judgment for theirs.” Id. DISCUSSION Parties’ Contentions National Union contends that the judgment of the Court of Special Appeals should be reversed because the intermediate appellate court imposed an incorrect standard under § 19-110 for proving actual prejudice and holding that National Union’s lack of control over the ESA Case was dispositive of the prejudice issue.

In addition, National Union maintains that FFA’s late notice caused National Union to lose the opportunity to mitigate its risk prior to entry of the adverse ESA judgment, thus, causing National Union actual prejudice. Moreover, according to National Union, collateral estoppel would be applied against FFA in the RICO Case to the detriment of National Union. In addition, National Union maintains that it was not required to plead collateral estoppel as an affirmative defense in the Coverage Case because it was only raising actual prejudice from late notice of the RICO Case as a defense to the breach of the insurance contract. In other words, National Union contends that the doctrine of collateral estoppel was only being used as an argument to support the defense of actual prejudice.

Further, National Union asserts that issues of insufficiency of evidence and FFA’s entitlement to judgment as a matter of law were never presented or decided by the Circuit Court. According to National Union, this Court should review whether the Court of Special Appeals abused its discretion in essentially instructing FFA, on remand, to move for judgment on the previous trial record and directing the Circuit Court to grant it. Finally, National Union urges that the case be remanded for a new trial to be tried in accordance with any new standard. ⁴⁵³ FFA, however, contends that the trial court erred as a matter of law in ruling that the evidence conclusively proved actual prejudice. National Union failed to show that prejudice resulted from FFA’s untimely notice to National Union of the RICO Case.

According to FFA, the uncontradicted evidence at trial was that judgment in the ESA Case “had a negligible effect on [FFA’s] decision to settle the RICO Case.” Moreover, FFA maintains that any prejudice to its defense in the RICO Case based on allegedly binding adverse findings from the ESA Case was hypothetical. Further, according to FFA, National Union waived collateral estoppel by not raising it in its answer as required by Md. Rule 2-823(g)(4). Actual Prejudice According to Maryland law, an insurer providing a liability insurance policy may disclaim coverage if an insured breached the policy by giving late notice of a claim and establishes by a preponderance of the evidence that late notice