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Philadelphia Indemnity Insurance Co. v. Maryland Yacht Club12/10/1999
REPORTED
This appeal focuses on whether a bodily injury exclusion in a directors' and officers' ("D&O;) liability insurance policy applied to a wrongful discharge action instituted against the insureds by a former employee who claimed he was fired from his job because of a work-related injury. Philadelphia Indemnity Insurance Company ("PIIC" or the "Insurer"), appellant, denied indemnity coverage and defense costs in connection with a wrongful discharge suit brought against Maryland Yacht Club, Inc. (the "Club") and three of its officers, Richard A. Weiss, Robin T. Barnes, and Bernard A. Fine, appellees. Dissatisfied with the Insurer's position, appellees initiated a declaratory judgment action against PIIC in the Circuit Court for Baltimore County, in which they also claimed breach of contract and negligence. After a motions hearing, judgment was entered in favor of appellees.
On appeal, PIIC presents four questions for our review, which we have condensed and reformulated as follows:
I. Did the circuit court err in construing the bodily injury exclusion?
II. Did the circuit court ignore the "last antecedent" rule when it determined that the bodily injury exclusion did not preclude coverage in this matter?
For the reasons discussed below, we shall affirm.
FACTUAL BACKGROUND
PIIC is a Pennsylvania-based insurer authorized to do business in Maryland. The Club is a nonprofit corporation that operates a navigating and sailing club in Pasadena. At the relevant time, the individual appellees were officers of the Club and members of the Club's Board of Governors and Executive Committee (collectively, the "Officers"). Article V, § 1 of the Club's Constitution and By-Laws states that " he affairs of the Corporation shall be managed by a Board of Governors." Article VI, § 2 empowers the Executive Committee "to conduct the business of the Club between meetings of the Board of Governors." Pursuant to Article VI, § 7, the Executive Committee is also authorized to employ and discharge the Club Manager. Article VI, § 1 dictates the Executive Committee's composition:
There shall be an Executive Committee of the Board of Governors of the [Club] consisting of the Commodore as Chairman, the Treasurer, the Secretary and the Immediate Past Commodore, all serving as ex-officio voting members. The additional voting members shall be the Vice-Commodore, Director of Clubhouse Operations, Director of Yacht Basin Operations, the Director of Buildings, Grounds and Utilities, the Director of Food Services and the Communications Coordinator.
Weiss served as the Commodore, Barnes was the Vice-Commodore, and Fine held the position of Director of Clubhouse Operations. Fine was also the Club's Insurance Chairman. It appears from the Constitution and By-Laws that the Officers provided their services to the Club on a volunteer basis.
On June 24, 1994, PIIC issued a "Non-Profit Directors and Officers Liability Insurance Policy" to the Club, Policy Number PHDO 101371 (the "Policy"). The Policy Declaration Page listed the Club as the "Named Insured" and its directors and officers as the "Insured." Thus, both the Club and the Officers were protected in accordance with the terms of the Policy, which ran from June 4, 1994 to June 4, 1995, and had a $2,000,000.00 limit of liability for each loss. The Club made all required premium payments in a timely manner. The Policy stated, in relevant part: INSURING AGREEMENTS
I. COVERAGES A and B
A. [PIIC] will pay on behalf of the Insured any Loss in an amount not exceeding the Limit of Liability in excess of the applicable Retention set forth in
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