A Maryland federal court has ruled that the insurer for an apartment building owner, not the property manager’s own carrier, must provide a defense in litigation stemming from a tenant’s alleged sexual assault during a repair visit. The decision came in a coverage dispute between two insurers after the property manager’s insurer stepped in to defend the case and then sought a declaration that the owner’s policy applied first.
The dispute arose from claims filed by a tenant in a Washington apartment building owned by 3921 Kansas LLC and managed by Alvin L. Aubinoe Inc. According to the allegations, a worker sent to the tenant’s unit for repair work sexually assaulted her. The lawsuit asserted multiple causes of action against both the manager and the owner, including negligence, assault and battery, and negligent hiring, retention, and supervision.
Why the Court Rejected the Coverage Denial
In Harford Mutual Insurance Co. v. Millers Capital Insurance Co., United States Magistrate Judge J. Mark Coulson granted summary judgment in favor of Harford Mutual Insurance Co., the Bel Air, Maryland-based insurer for Aubinoe. Harford had argued that Millers Capital Insurance Co., based in Camp Hill, Pennsylvania, was obligated to defend Aubinoe under the building owner’s commercial general liability policy.
That policy identified as an insured “any organization while acting as your real estate manager.” Millers Capital contended that it had no duty to defend because the management agreement between 3921 Kansas and Aubinoe contained indemnification language that, in its view, shifted responsibility back to the property manager.
Judge Coulson disagreed and concluded that the insurance policy imposed its own independent duty to defend, separate from the private contractual arrangement between the owner and the manager. The court found that Aubinoe’s role plainly fell within the policy language, noting that it was acting as a real estate manager when it screened, hired, trained, and supervised its personnel.
The opinion emphasized that Millers Capital could not avoid coverage by relying on terms from a separate management contract. As the court explained, the insurer could not sidestep its defense obligation simply because the agreement between Aubinoe and 3921 Kansas included wording the insurer would have preferred to use in support of its position.
