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Litz v. State Farm Fire and Casualty Co.6/27/1997
). When we consider Mr. Litz and Mrs. Litz as each having separate insurance policies, we conclude that Mrs. Litz's exclusion from coverage under her policy should not affect Mr. Litz's coverage under his policy. See COUCH ON INSURANCE ยง 23:2 (3d ed. 1996) ("A common provision declares the interests of various insureds to be severable, so that a breach by one does not destroy coverage for all."). Because Mr. Litz has not engaged in any activities excluding him from coverage, he is covered by the policy. See Worthington, 46 F.3d at 1009 (holding that co-insured spouse not barred from coverage under homeowner's liability policy when damages caused by husband's assault on a third party are excluded from the policy); Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 840 P.2d 456, 462 (Kan. 1992) (holding that co-insured parents not barred from coverage under homeowner's liability policy when damages resulting from child's intentional conduct excluded from the policy); Marnell, 496 N.E.2d at 160-61 (holding that co-insured parents not barred from coverage under homeowner's liability policy when damages resulting from child's automobile accident were excluded from the policy); cf. Wedtech Corp. v. Federal Ins. Co., 740 F. Supp. 214, 218-19 (S.D.N.Y. 1990) (holding that severability clause in directors' and officers' insurance permitted coverage for those directors and officers who had not made false representations but policy was voided for the directors and officers who made false representations).
B.
We return now to potentiality of coverage. There exists a potentiality of coverage in this case. Assuming Mr. Litz was not involved in the excluded activity, this case then is "a suit . . . against an insured for damages because of bodily injury . . . to which this coverage applies," under the terms of the general insuring provisions of his policy. As to Mr. Litz, the suit by the Wrights is a suit for bodily injury free of the business pursuits exclusion, and State Farm has promised to defend him. As we noted in Brohawn the "obligation [to defend] is contractual and exists because of the agreement made by [the insurer and the insured]. . . . The promise to defend the insured, as well as the promise to indemnify, is the consideration received by the insured for payment of the policy premiums." Brohawn, 276 Md. at 408-09, 347 A.2d at 850.
If there is a possibility, even a remote one, that the plaintiffs' claims could be covered by the policy, there is a duty to defend. See Brohawn, 276 Md. at 408, 347 A.2d at 850; Janquitto, (supra) , at 13-14. We noted in Cochran, 337 Md. at 112, 651 A.2d at 866, that
an insured cannot assert a frivolous defense merely to establish a duty to defend on the part of his insurer. Only if an insured demonstrates that there is a reasonable potential that the issue triggering coverage will be generated at trial can evidence to support the insured's assertion be used to establish a potentiality of coverage under an insurance policy.
In this case, Mr. Litz has demonstrated a reasonable potential that the issue triggering coverage, i.e., that he never participated in the babysitting, will be generated at trial. We hold that the possibility that the factfinder may conclude that Mr. Litz was not involved in the babysitting creates a potentiality of coverage and entitles Mr. Litz to a defense in the underlying tort case.
C.
We next address whether State Farm must pay Mr. Litzes' attorney's fees incurred in defending the declaratory judgment action. Contrary to the usual American rule that the prevailing party in litigation may not recover attorneys' fees from the losing party, an insured may recover attorneys
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