Realty Co. Settles With Its Insurer over Legal Defense Coverage Dispute
America ı By Samuel Lopez
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This is the case of Fairfax Realty of Rockville LLC et al. v. Greenwich Insurance Co., in the U.S. District Court for the District of Maryland.
This dispute arose when a Maryland real estate brokerage company and a real estate agent were sued by a homebuyer who alleged they sold him a defective home.
The attorney for the brokerage company and the agent argued in their complaint that they were entitled to legal defense coverage for the underlying case, and argued that their insurer, Greenwich cannot rely on a property damage exclusion in an errors and omissions policy to deny coverage.
In its complaint, Fairfax Realty of Rockville LLC accused Greenwich Insurance Co. of obstinately refusing to cover the broker and its agent, Ellen Lima, in the suit that alleged the client purchased a home with undisclosed "latent defects."
The Settlement
This week the two litigants announced that they have settled their dispute as to whether they had coverage for the underlying negligence lawsuit filed by the homebuyer.
On Tuesday, Judge Peter J. Messitte of the U.S. District, dismissed the suit against Greenwich Insurance Co., without prejudice, allowing the litigants 60 days to finalize their settlement agreement. The terms of the settlement were not disclosed.
Relevant Case Background
In its complaint filed in October 2022, Fairfax alleged that Greenwich was refusing to cover the brokerage company or Ms. Lima's defense costs in the lawsuit bought by the homebuyer who was accusing them of undisclosed "latent defects," negligent misrepresentation, and unjust enrichment.
Fairfax and Lima said they spent $170,000 defending the action and wanted Greenwich to cover them for their losses.
They sued Greenwich for reimbursement of that amount, asserting claims for breach of contract and declaratory judgment against Greenwich.
The plaintiffs argued that Greenwich was acting in bad faith by denying coverage and using the policy's property damage exclusion, as a basis to deny the claim.
In their complaint, the plaintiffs characterized the underlying lawsuit, as the buyer having alleged that he suffered damages related to the purchase price, property taxes, and closing costs, which he claimed were not worth the price he paid because of the alleged defects.
The homebuyer was also attempting to recover costs he claims he incurred for rental, moving, and storage costs, as well as compensation for mental anguish.
The homebuyers lawsuit was dismissed with prejudice in March 2022
Conclusion
The court has given the parties 60 days to execute and finalize their written settlement agreement.
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