Recent developments for insurance case law: Board of Education of Worcester County v. Horace Mann Insurance Company, 969 A.2d 305, 2009 Md. LEXIS 44 (Md. 2009)

This case arose out of a high school student’s claim that he was assaulted by his Vice Principal. The student filed a one-count Complaint for assault against the Vice Principal, alleging that he was called to the Vice Principal’s office and, behind closed doors, the Vice Principal brandished a knife with a six or seven inch blade directly in front of him, placing him in imminent fear for his safety. The Board of Education of Worcester County refused to provide the Vice Principal with counsel to defend himself against the allegations. Instead, Horace Mann provided him with a defense pursuant to an educator’s liability policy, under which the Vice Principal was insured as a member of the Maryland State Teacher’s Association. The issue before the Court of Appeals was whether the county board of education had been required to provide the Vice Principal with a defense.

The Board of Education of Worcester County maintained a self-insurance policy through the Maryland Association of Boards of Education Group Insurance Pool, along with several other county boards of education. The Vice Principal was not entitled to a defense under the terms of that self-insurance policy. This was not an issue on appeal. Rather, the issue was whether the Board was statutorily required to provide a defense to the Vice Principal.

The Education Article requires county boards of education to provide counsel to defend employees against any suit if the employee was acting in the performance of his duties, within the scope of his employment, and without malice. Md. Code Ann., Educ., §4-104(d). In an earlier case, in which McCarthy Wilson LLP also represented the prevailing party, Montgomery County Board of Education v. Horace Mann Insurance Co., 383 Md. 527, 860 A.2d 909 (2004), the Court of Appeals established that the potentiality rule applies to this statutory duty to defend. Thus, under the statute, a county board of education is required to provide a defense to its employee if there is a potentiality that the conduct at issue was undertaken in the performance of the employee’s duties, was within the scope of employment and was without malice. In this case, the Court of Appeals held that the Complaint, together with extrinsic evidence, i.e., the Vice Principal’s responses to discovery requests, established the potentiality that he was acting pursuant to his duties, within the scope of his employment and without malice at the time the alleged assault occurred. As Vice Principal, the employee was required to address disciplinary matters and he had called the student to his office to discuss alleged peer harassment. The Vice Principal showed the student the knife as part of a discussion about the negative impacts of peer to peer harassment. Thus, there was a potentiality of coverage and, under section 4-104(d) of the Education Article, the board of education was required to defend the Vice Principal.