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Progressive Casualty Insurance Case Summary

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Please allow this correspondence to supplement our initial coverage analysis concerning this claim. The Progressive Casualty Insurance Company (“Progressive”) had previously requested our legal analysis, and has specifically asked whether it has a duty to defend Tristate Trucking, LLC (“Tristate” or the “insured”) in litigation filed in the Superior Court of New Jersey Law Division Monmouth County, No. MON-L-3550-16 (the “lawsuit”), and whether Progressive may be liable to, Mylesa Walton, Michael Peavy, or Nazir Peavy (collectively the “Plaintiffs”) in the event of an adverse judgment. For reasons more fully articulated in our correspondence dated February 21, 2017, it is our opinion that Progressive has no duty to defend Tristate, but that…show more content…
Co. v. Distrib. Servs., Inc., 320 F.3d 488, 490 (4th Cir. 2003); McGirt v. Royal Ins. Co. of Am., 399 F.Supp. 2d 655, 665 (D. Md. 2005), abrogated by McGirt v. Gulf Ins. Co., 207 Fed. Appx. 305 (4th Cir. 2006) (The MCS-90 serves the purpose of the MCA by “creating a suretyship by the insurer to protect the public when the policy otherwise provides no coverage to the insured, [and] ensures someone will pick up the tab when the public is injured by the carrier’s accident and the policy terms deny coverage.” (internal quotation…show more content…
See Dixon v. Spencer, 59 Md. 246, 247-48 (1883). The surety, however, becomes subrogated to the rights of the obligee when the surety pays the debt for the principal obligor. See Weast v. Arnold, 299 Md. 540, 553, 474 A.2d 904, 911 (1984). With respect to notice of default, the surety is ordinarily held to know every default of his principal because he is under a duty to make inquiry and ascertain whether the principal obligor is discharging the obligation resting on him. See L. Simpson, supra, § 41, at 165 (“[I]t is generally not necessary for the creditor to notify the surety of the fact that the principal debtor is in default on his promise. It is the duty of the surety to the creditor to see that the debt is paid.”). Consequently, the surety is ordinarily liable without notice. Gen. Motors Acceptance Corp. v. Daniels, 303 Md. 254, 259-60 (1985) (emphasis added). Accordingly, in the event that an adverse final judgment is obtained against Tristate, Progressive will be liable to the Plaintiffs to the same extent that Tristate is liable to the Plaintiffs for the entire amount of the judgment. The Plaintiffs may elect the entity from whom they wish to collect that judgment without first exhausting Tristate’s assets. If, however, the Plaintiffs elect to collect from Progressive, then, Progressive could seek indemnification from Tristate (and its other insurers)
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