Baltimore citizens may recall the salacious circumstances of the underlying action giving rise to Hussy v. Hous. Auth. of Baltimore City, 2018 WL 1947049, *8-9 (D. Md. Apr. 24, 2018), under which Mr. Hussy, among other maintenance workers at the city’s Gilmor Homes property, was indicted for soliciting sexual favors from tenants in exchange for repairs.  Mr. Hussy, in addition to the criminal charges against him, was also sued civilly.  Mr. Hussy expected that Housing Authority Risk Retention Group (“HARRG”) would provide coverage for the legal fees arising out of his legal troubles.  HARRG, however, denied coverage to Mr. Hussy in not one but two coverage position letters.

Mr. Hussy brought statutory and contractual bad faith claims against HARRG for failing to provide him a defense.  Mr. Hussy lost both claims against HARRG on summary judgment.  Mr. Hussy’s claims failed to meet the standard required under Maryland law to maintain a bad faith claim, namely that he allege his claims with “certainty and definiteness.”  Despite the general maxim that the duty to defend is broader than the duty to indemnify, here, Mr. Hussy failed to demonstrate he was entitled to any type of coverage.  First, he failed to tie his bad faith arguments to a single provision in the policy, unlike HARRG, who provided lengthy coverage position letters – the shortest of which was twelve pages – explaining why Mr. Hussy would be denied coverage.  Second, Mr. Hussy had coverage only for acts within the scope of his employment, and specifically not for sexual misconduct.  The underlying claims against Mr. Hussy were singularly accusations of sexual misconduct.  Third, Mr. Hussy’s complaints that the two coverage position letters were only provided via certified mail to his employer failed to amount to bad faith.  The court found HARRG’s transmittal via Mr. Hussy’s employer sufficient, especially considering that Mr. Hussy failed to indicate how this transmission prejudiced him, even assuming his employer failed to forward HARRG’s letters to Mr. Hussy.  

This Maryland federal court decisions affirms an insured’s ability to deny defense coverage for an insured as long as it does so “by the book”: by providing timely, and thorough coverage position letters to an appropriate agent of the insured, if not the insured himself.  Ultimately, the insurer’s solid coverage position made this case cut and dry, but it solidified its success on summary judgment, even with a defense denial, by carefully communicating its position to the insured.