# Sheets v. Brethren Mutual Insurance

> Court of Appeals of Maryland · July 26, 1996 · 342 Md. 634

URL: https://www.frixlaw.com/law-library/cases/9707600

## Case

- **Full name:** Robert T. SHEETS, Jr. Et Ux. v. the BRETHREN MUTUAL INSURANCE COMPANY
- **Court:** Court of Appeals of Maryland
- **Decided:** July 26, 1996
- **Citations:** 342 Md. 634; 679 A.2d 540; 58 A.L.R. 5th 883; 1996 Md. LEXIS 72
- **Precedential status:** Published
- **Opinion:** Dissent by Karwacki
- **Judges:** Chasanow, Karwacki
- **Cited by:** 120 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9707600

## How later opinions describe it (automated extraction)

- finding that an act of negligence “constitutes an ‘accident’ under a liability insurance policy when the resulting damage was ‘an event that takes place without [the insured’s] foresight or expectation.’” (quoting Harleysville Mut. Cas. Co. v. Harris & Brooks, Inc., 248 Md. 14…
- holding that the proper standard for determining whether a negligent act is an "ac- 2 cident" under a CGL policy is subjective -- whether the damage was unforeseen or unexpected by the insured
- holding that the duty to defend arises for any “action that is potentially covered by the policy, no matter how attenuated, frivolous, or illogical that allegation may be” (emphasis added)
- holding that “an ‘accident’ under a liability insurance policy [occurs] when the resulting damage was ‘an event that takes place without [the insured’s] foresight or expectation.’ ”

## Opinion text

KARWACKI, Judge,
dissenting.
The majority of this Court has determined that this case should be reversed and remanded to the trial judge to enter summary judgment on behalf of the insureds. Because I *659 would hold that a negligent misrepresentation cannot, by definition constitute an “occurrence” as defined in the liability policy in question, I would affirm the trial court. Therefore, I respectfully dissent.
I.
The majority opinion has done an admirable job of surveying the decisions of our sister jurisdictions, and categorizing them. Majority opinion at 654-657. As I interpret it, much of this disagreement around the country about whether negligent misrepresentation constitutes an “accident” within the meaning of a liability insurance policy may be attributed to a more fundamental dispute about the nature of the tort of negligent misrepresentation. Clearly, negligent misrepresentation is a difficult concept, whose very name breeds confusion. The name “negligent misrepresentation” is, in itself, an oxymoron because to “misrepresent” requires some measure of intentionality, while the word “negligent” seemingly contradicts the necessity of intent. The prima facie elements of the tort of negligent misrepresentation in Maryland were recently repeated in Gross v. Sussex, 332 Md. 247 , 630 A.2d 1156 (1993):
“(1) the defendant, owing a duty of care to the plaintiff, negligently assents a false statement;
(2) the defendant intends that his statement will be acted upon by the plaintiff;
(3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury;
(4) the plaintiff, justifiably, takes action in reliance on the statement; and
(5) the plaintiff suffers damage proximately caused by the defendant’s negligence.”
Id. at 259 , 630 A.2d at 1162 (emphasis added). The identical formulation may be found in Village of Cross Keys v. United States Gypsum Co., 315 Md. 741, 755-56 , 556 A.2d 1126, 1133 (1989); Weisman v. Connors, 312 Md. 428, 444 , 540 A.2d 783, *660 783 (1988); Martens Chevrolet v. Seney, 292 Md. 328, 337 , 439 A.2d 534, 539 (1982). Negligent misrepresentation clearly has elements sounding both in intentional tort and in negligence.
In Ellerin v. Fairfax Savings, 337 Md. 216 , 652 A.2d 1117 (1995), we had occasion to review the law of negligent misrepresentation. In that case we held that although punitive damages may be recovered for fraud, punitive damages were not available in suits based on negligent misrepresentation. Id. at 235 , 652 A.2d at 1126 . The reason for the distinction is plain: liability for negligent misrepresentation is inconsistent with the punitive damage standard of actual malice. Id. Stated otherwise, actual malice requires a degree of intentionality not found in negligent misrepresentation.
It is an insufficient analysis, however, merely to note that this Court adheres to our traditional distinction between fraud and negligent misrepresentation, or that negligent misrepresentation is insufficiently intentional to support punitive damages. The question here is whether negligent misrepresentation has a sufficiently intentional quality to distinguish it from an accident. To make that determination, a closer look at negligent misrepresentation is necessary.
I observe that the first prima facie element of the tort of negligent misrepresentation requires that the defendant “assert” the false statement. Black’s Law Dictionary (6th ed. 1990) defines the term “assert” as “[t]o state as true; declare; maintain.” None of these definitions is consistent with an accidental “blurt.” Instead, an assertion requires a degree of intentionality inconsistent with the term accident. This result is consistent with a common sense understanding that a voluntary verbal statement cannot, by definition, constitute an accident, as that term is intended by the policy.
The second element of the tort of negligent misrepresentation requires that the defendant “intends” that the plaintiff will act in reliance upon this statement. This intention, although quite distinct from the intent to deceive necessary to establish fraud, see Ellerin v. Fairfax Savings, supra, is also inconsistent with conceptions of ordinary negligence. Al *661 though acts that are ordinarily negligent may contain some volitional elements, 1 they are distinct from the intent necessary to prove negligent misrepresentation. The “inten[t] that his statement will be acted upon,” Gross at 259 , 630 A.2d at 1162 , is therefore inconsistent "with the insurance contract and judicial definitions of “occurrence” as accidental, undesigned or unintended. Ed. Winkler & Son v. Ohio Cas. Ins. Co., 51 Md.App. 190, 195 , 441 A.2d 1129, 1132 (1982). 2
I would therefore choose to have Maryland pick our own path between those of our sister states. Although I would adhere to our traditional distinction between fraud and negligent misrepresentation, I would nonetheless hold that the limited intentionality necessary for negligent misrepresentation is of a sufficient quality to not qualify as an accident, and thus, not an “occurrence.” Because I would hold that negligent misrepresentation cannot be an occurrence, it would follow that Brethren has no duty to defend the Sheets against the Christensens’ suit, and that the trial court was entirely correct in granting summary judgment.
II.
I also wish to note my dissent from those portions of the majority opinion labelled as sections V(C) 1 and 2, where the relationship between the policy definition of an “accident” and the negligence standard in tort law is explored. This relationship was not briefed or addressed by either party, is beyond the scope of this appeal, and is superfluous to the decision. I also fear that the majority’s new definition of an “accident” may have the unintended effect of resurrecting the antiquated and artificial distinction between accidental means and accidental results, which Justice Benjamin Cardozo termed a *662 “Serbonian Bog.” Landress v. Phoenix Mut. Life Ins., 291 U.S. 491, 499 , 54 S.Ct. 461, 463 , 78 L.Ed. 934, 938 (1934) (Cardozo, J. dissenting) (quoting John Milton, Paradise Lost bk. 2, 1. 592 (1667)) (“A gulf profound as that Serbonian Bog [Lake Serbonis, in lower Egypt] Betwixt Damiata and mount Casius old, Where Armies whole have sunk.... ”).
I consider the question foreclosed as a matter of Maryland law by virtue of our oft-repeated pronouncement that in construing insurance contracts,
“[w]ords are given their ‘customary, ordinary, and accepted meaning,’ unless there is an indication that the parties intend to use the words in a technical sense. ‘A word’s ordinary signification is tested by what meaning a reasonably prudent layperson would attach to the term.’ ”
Sullins v. Allstate Ins. Co., 340 Md. 503, 508 , 667 A.2d 617, 619 (1995) (citations omitted). Under that rule of construction, we may not engage in the “tortuous and tortured legal jiu-jitsu,” O.C. Sattinger, Annotation, Insurance: “Accidental Means” as Distinguishable from “Accident, ” “Accidental Result, ” “Accidental Death, ” “Accidental Injury, ” etc., 166 A.L.R. 469 , 477 (1947), involved in attempting to separate an accidental result from the accidental means of obtaining that result. Instead we must consider if an ordinary layperson would consider a negligent misrepresentation to be an accident. For me, that answer is clearly no.
III.
For the reasons discussed, I would affirm the trial judge’s entry of summary judgment for Brethren.
Chief Judge MURPHY has authorized me to state that he concurs with the views expressed herein.
. One example of the volitional aspect of ordinary negligence would be found if A threw a rock that accidentally hit B. A intended to throw the rock; he did not intend for the rock to hit B. While A’s act would be considered negligent, it did have a volitional component.
. For the reasons stated in part II of this dissenting opinion, I disagree that there was a need to overrule the decision in Ed. Winkler, supra.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9707600. Public record. Not legal advice.