The Insurer's Duty to Defend in the District of Columbia

In Stevens v. United General Title Insurance Co. , 801 A.2d 61 (D.C. 2002), the Court reaffirmed the District of Columbia's adherence to the "eight corners rule," requiring a comparison of the complaint with the insurance policy to determine the existence of a duty to defend. "Under [the 'eight corners rule'], an insurer's duty to defend is determined by comparing the complaint . . . with the policy. If the facts alleged in the complaint . . . would give rise to liability under the policy if proven, the insurer must defend the insured." Id.

The scope of an insurer's duty to defend an action against its insured, as distinguished from its obligation to indemnify the insured for any resulting judgment, is:

to be determined by the allegations of the complaint. This obligation is not affected by facts ascertained before suit or developed in the process of litigation or by the ultimate outcome of the suit. If the allegations of the complaint state a cause of action within the coverage of the policy, the insurance company must defend. On the other hand, if the complaint alleges a liability not within the coverage of the policy, the insurance company is not required to defend. In case of doubt such doubt ought to be resolved in the insured's favor.

I.J.G. v. Penn-America Ins. Co. , 803 A.2d 430 (D.C. 2002); Boyle v. National Casualty Co. , 84 A.2d 614, 615-616 (D.C. 1951)(footnotes omitted); accord, e.g., Beltway Management Co. v. Lexington-Landmark Insurance Co. , 746 F.Supp. 1145, 1149 (D.D.C. 1990); Central Armature Works, Inc. v. American Motorists Insurance Co. , 520 F. Supp. 283, 287 (D.D.C. 1980); Washington v. State Farm Fire & Casualty Co. , 629 A.2d 24, 25-26 (D.C. 1993); Western Exterminating Co. v. Hartford Accident & Indemnity Co. , 479 A.2d 872, 874 (D.C. 1984); S. Freedman & Sons, Inc. v. Hartford Fire Insurance Co. , 396 A.2d 195, 197 (D.C. 1978).

Like other jurisdictions, the District of Columbia follows the principle that the duty to defend is broader and more extensive than the duty to indemnify. See Salus Corp. v. Continental Cas. Co. , 478 A.2d 1067, 1069-70 (D.C. 1984). Any doubt as to whether there is a duty to defend must be resolved in favor of the insured. See Washington v. State Farm Fire & Cas. Co., 629 A.2d 24, 26 (D.C. 1993).

In doing so, it is necessary to apply the District of Columbia doctrines regarding the interpretation of insurance contracts.

"The phraseology of contracts of insurance is that chosen by the insurer and the contract in fixed form is tendered to the prospective policyholder who is often without technical training, and who rarely accepts it with a lawyer at his elbow." Pennsylvania Indem. Fire Corp. v. Aldridge , 73 App. D.C. 161, 162, 117 F.2d 774, 775 (1941) (quoting Aschenbrenner v. United States Fid. & Guar. Co. , 292 U.S. 80, 84, 78 L. Ed. 1137, 54 S. Ct. 590 (1934)). In recognition of these realities, ambiguities in an insurance policy are construed against the insurer and in favor of "the reasonable expectations of the purchaser of the policy." Smalls v. State Farm Mut. Auto. Ins. Co. , 678 A.2d 32, 35 (D.C. 1996).

"The general rule applicable in the interpretation of an insurance policy is that, if its language is reasonably open to two constructions, the one most favorable to the insured will be adopted. Any fair doubt as to the meaning of its own words should be resolved against the insurer." Aldridge , 73 App. D.C. at 162, 117 F.2d at 775.
Under District of Columbia law, the courts must interpret an insurance policy objectively, based on the language of the policy and the expectations that the insured reasonably could have formed on the basis of that language. American Red Cross v. Travelers Indem. Co. , 816 F.Supp. 755, 758 (D.D.C. 1993).

In determining the "objectively reasonable" reading of the policy, the Court must give effect to the policy's dominant purpose of indemnity. Id . If the policy language is unambiguous, the Court must apply the plain meaning of the language used and should not consider extrinsic evidence as to how to interpret the policy. Id . If the policy is ambiguous, the Court may consider evidence of usages and customs affecting the agreement to determine the parties' intent. Id . Any ambiguity in the insurance contract must be construed in favor of the insured. Id . Whether language in a contract is genuinely ambiguous is a question of law. The Court must follow the guideline that, "unless it is obvious that words which appear in an insurance contract are intended to be used in a technical connotation, they will be given the meaning which common speech imports." Aldridge , 73 App. D.C. at 162, 117 F.2d at 775. Policy language is not genuinely ambiguous unless "it is susceptible of more than one reasonable interpretation." American Bldg. Maint. Co. v. L'Enfant Plaza Prop., Inc. , 655 A.2d 858, 861 (D.C. 1995) (emphasis added).

Under D.C. law, if the language of an insurance policy is ambiguous, the contract is construed to favor the insured. Bernstein v. North East Ins. Co. , 19 F.3d 1456 (D.C. Cir. 1994); John Akridge Co. v. Travelers Companies , 876 F.Supp. 1 (D.D.C. 1995).

Under D.C. law, an insurer has a duty to spell out in the plainest terms any exclusionary or delimitating policy provisions. Potomac Elec. Power Co. v. California Union Ins. Co. , 777 F. Supp. 968 (D.D.C. 1991); American Ins. Co. v. Tutt , 314 A.2d 481 (D.C. 1974); Nationwide Mut. Ins. Co. v. Shilansky , 176 A.2d 786 (D.C.Mun. App. 1962). Exclusionary language in an insurance policy must be strictly construed and given any reasonable interpretation that favors coverage. See, e.g. Continental Cas. Co. v. Cole , 809 F.2d 891, 895 (D.C. Cir. 1987). The insurer has the burden of proving the applicability of a policy exclusion. See Chicago Title Ins. Co. v. Resolution Trust Corp. , 53 F.3d 899, 905 (8th Cir. 1995); see also Nat'l Elec. Mfrs. Ass'n v. Gulf Underwriters Ins. Co. , 162 F.3d 821, 824 (4th Cir. 1998)( citing Washington Sports & Ent't, Inc. v. United Coastal Ins. Co. , 7 F.Supp. 2d 1, 7 (D.D.C. 1998).