United States District Court, E.D. Virginia, Alexandria Division
January 3, 2017
ESSEX INSURANCE COMPANY, Plaintiff,
Y&J CONSTRUCTION, INC., et al., Defendants.
Ellis, III, United Slates Distridt Judge
insurance coverage dispute arises from property damage caused
by a fire that occurred during a construction project at
Building 207 at Fort Belvoir, Virginia (the “Fort
Belvoir project”). The damage stemmed from roofing
activities by a subcontractor, defendant Y&J
Construction, Inc. (“Y&J”), that involved the
use of torches in the installation of the roof. The general
contractor's insurer, defendant Pennsylvania National
Mutual Insurance Company (“Penn”), paid for the
damage and subsequently filed a subrogation action against
Y&J to recover the amount paid. See Pa. Nat'l
Mut. Cas. Ins. Co. v. Y&J Constr., Inc., No.
15-cv-1283 (E.D. Va. Oct. 2, 2015) (Complaint) (the
“Subrogation Action”). Specifically, Penn, in the
Subrogation Action, has alleged (i) that Y&J acted
negligently in causing the Fort Belvoir fire on August 13,
2012; (ii) that Y&J breached its subcontracting agreement
with the general contractor on the Fort Belvoir project,
Autumn Contracting, Inc. (“Autumn Contracting”);
and (iii) that Y&J must indemnify Penn. See Id.
Y&J's insurer, Essex Insurance Company
(“Essex”), filed this declaratory judgment action
pursuant to 28 U.S.C. § 2201(a),  seeking:
(i) a declaration that Essex has no obligation to defend
Y&J in Penn's Subrogation Action against Y&J;
(ii) a declaration that Essex has no obligation to indemnify
Y&J for any judgment, settlement, or recovery in the
Subrogation Action; and
(iii) a declaration that Essex has no obligation to Penn,
including any obligation to indemnify Penn, with respect to
any subrogation rights Penn possesses as a result of
Penn's payment on behalf of its insured resulting from
the Fort Belvoir fire caused by Y&J.
full discovery and the disposition of pretrial motions, the
parties waived a jury, and a bench trial was held. During the
bench trial plaintiff presented three witnesses, and
defendant offered two. Importantly, it was undisputed that
Y&J's use of torches caused the fire at the Fort
Belvoir project on August 13, 2012, and that the insurance
policy (“the Policy”) that Essex issued to
Y&J included a roofing endorsement that excluded from
coverage damages arising from Y&J's use of torches.
Given that these essential facts were undisputed, during the
trial the parties focused on the following key issues: (i)
whether Y&J was given notice of the roofing endorsement
in the Policy; and (ii) whether Y&J is entitled to
reformation of the Policy's roofing endorsement to
include coverage of Y&J's torch work. The following
Findings of Fact and Conclusions of Law are issued pursuant
to Rule 52, Fed. R. Civ. P.
FINDINGS OF FACT
Essex was an insurance company organized under the laws of
Delaware, with its principal place of business in Glen Allen,
Essex contracted with an insurance broker, All Risks, Inc.
(“All Risks”), to underwrite, issue, and deliver
insurance policies on Essex's behalf. All Risks
underwrote the Policy at issue in this case.
Y&J was a corporation organized under the laws of
Maryland, with its principal place of business in Fulton,
Maryland. Y&J's president was Youngjae Jeon
(“Jeon”), and Y&J's general manager was
Ms. Jeon's husband, Duok Yun
Jeon, Y&J's president, is a registered nurse with a
master's degree in Hospital Administration who reads,
writes, and speaks English.
is a corporation organized under the laws of Pennsylvania
with its principal place of business in Harrisburg,
all relevant times, Y&J and Penn transacted or did some
business in Virginia.
Defendant Penn insured Autumn Contracting, the general
contractor on the Fort Belvoir project.
November 7, 2011, Autumn Contracting and Y&J executed a
Master Subcontracting Agreement, which agreement obligated
Y&J to perform roofing work on the Fort Belvoir project
and to obtain insurance coverage for that work.
Subsequently, Y&J engaged Insurance Plus, an experienced,
licensed insurance agency based in Maryland, to provide
Y&J assistance in procuring commercial general liability
insurance for Y&J's roofing work on the Fort Belvoir
Insurance Plus is licensed to sell, solicit, and negotiate
insurance contracts in Virginia, and has offices in both
Maryland and Virginia.
Y&J selected Insurance Plus after looking through the
Korean business phone book, noting that Insurance Plus was a
Korean insurance agency, and learning that one of Insurance
Plus's employees, Jong Yang (“Yang”), spoke
Jeon and Yun, on behalf of Y&J, visited Yang at an
Insurance Plus office in Virginia on one occasion; during the
course of that visit, Jeon and Yun informed Yang that Y&J
was opening a roofing business and needed general liability
and worker's compensation insurance coverage.
Y&J advised Insurance Plus that Y&J's workers had
used torches on past roofing projects. Although Y&J
misrepresented in its insurance application how much of its
work dealt with new roofing, as opposed to repair work, Mr.
Yun stated that Y&J sought coverage for work involving
the use of asphalt, metal roofs, welding, and torches.
Yang at Insurance Plus assisted Jeon and Yun in filling out
the paperwork to obtain insurance coverage from a surplus
lines insurance carrier for Y&J's roofing work at the
Fort Belvoir project.
Essex's broker, All Risks, drafted the Policy in Maryland
on behalf of Essex.
Policy was issued to Y&J as a commercial general
liability insurance policy for the period running from
November 14, 2011 to November 14, 2012, in the amount of $1,
000, 000 for any occurrence and $2, 000, 000 in general
aggregate limit, subject to the terms and exclusions of the
Policy was sent to Insurance Plus from Maryland, and
delivered to Y&J in Maryland.
Insurance Plus also sent Y&J a certificate of liability
insurance that, on its face, stated that the certificate was
not the Policy and conferred no rights on the certificate
holder. D. Ex. 6.
Policy requires Essex to provide coverage for amounts that
Y&J becomes legally obligated to pay as damages due to
“bodily injury” or “property damage”
to which the Policy applies. See Policy (P. Ex. 2)
Specifically, “property damage” under the Policy
means, inter alia, “[p]hysical injury to
tangible property, including all resulting loss of use of
that property.” See Id. at CG 00 0112 07.
Policy includes a provision permitting a “person or
organization” to sue Essex on the “Coverage Part
[so long as] all of its terms have been complied with.”
Id. at CG 00 0112 07 § 3.
Policy further permits “[a] person or organization [to]
sue [the insurer] to recover on an agreed settlement or on a
final judgment against an insured, ” so long as the
damages are “payable under the terms of [the Policy]
and [not] in excess of the applicable limit of
Pursuant to the Policy, Essex has no duty to defend the
insured against any suit seeking damages for bodily injury or
property damage to which the insurance coverage does not
this respect, the Policy contains a roofing endorsement that
excludes from coverage any bodily injury, property damage,
personal injury, advertising injury, or any injury, loss, or
damage arising out of “[a]ny operations involving any
hot tar, wand, open flame, torch or heat applications, or
membrane roofing.” Id. M/E-191 (4/99), §
Policy also excludes from coverage “claims arising out
of breach of contract, whether written or oral, express or
implied, implied-in-law, or implied-in-fact….”
Id. MEGL 0001 05 10, § 1.
Essex would not have issued the insurance policy without a
roofing endorsement, and the Policy's premium would have
been significantly higher had Essex intended to cover the
torch work that caused the fire at the Fort Belvoir project.
November 9, 2011, before Y&J purchased the Policy, an
underwriter employed by All Risks sent Insurance Plus an
email advising that the Policy would include the roofing
endorsement. That November 9, 2011 email also attached the
roofing endorsement. See P. Ex. 33 (“I have
attached a copy of the roofing endt ME-191 (4/99).”).
That same day, November 9, 2011, All Risks also sent
Insurance Plus two insurance quotations for the Policy.
first quotation warned that the coverage Essex was offering
could differ from the coverage Y&J had requested.
Specifically, the quotation stated, “We are pleased to
submit our proposal . . . . Quote is based on the following
limits, coverage, etc. Please read quote carefully as
coverages being offered may be more limited than coverages
requested.” P. Ex. 40.
This document quoted the total price of the insurance
premium, plus fees, as $4, 679.
second quotation included a similar warning regarding
endorsements, stating that the “quotation may differ
from the terms requested in [Y&J's] submission.
Please review our quotation carefully.” P. Ex. 41.
This second quotation further warned, in bold letters and
enlarged font size, “Please review form ME191 for the
types of roofing exposures that we exclude.”
That same document specifically noted in capitalized letters
that form ME191 was a “ROOFING ENDORSEMENT.”
Id.; see Findings of Fact ¶ 24
(quoting form ME191).
November 11, 2011, Y&J's President, Ms. Jeon, wrote a
check from a Maryland bank account for $4, 679-the exact
amount identified one of the quotations, P. Ex. 40 -made
payable to All Risks, which check Essex ultimately received.
Penn now claims that Y&J was unaware of the roofing
endorsement before the August 13, 2012 fire, contending that
although the quotations and Policy were sent to Insurance
Plus, Y&J never saw those documents and the Policy was
never delivered to Y&J. These claims are not supported by
begin with, Insurance Plus's regular practice over the
past 25 years has been to forward quotations and insurance
policies to clients; moreover, Insurance Plus's customary
practice is to inform clients of coverage exclusions and to
communicate the nature of such exclusionary language. Thus,
although Mr. Yang at Insurance Plus does not specifically
recall forwarding the Policy or specifically discussing the
roofing endorsement with Y&J, it is more likely true than
not that Mr. Yang forwarded the Policy to, and discussed the
Policy's exclusions with, Y&J.
Indeed, Mr. Yang testified that he gave Ms. Jeon a copy of a
quotation (P. Ex. 41), which identified and disclosed the
Consistent with Mr. Yang's testimony, Y&J's
president, Ms. Jeon, admitted that while she was procuring
insurance coverage-i.e., before the Policy was issued or
delivered, and well before the August 2012 fire-she received
both quotations (P. Exs. 40 and 41). See Findings of
Fact ¶¶ 28-37.
Specifically, on re-direct examination, Ms. Jeon testified
that she received the document identified as P. Ex. 40
“[w]hile I [was] getting the insurance” at
“around the same time” that she received a copy
of the quotation identified as P. Ex. 41. Tr., Day 2,
Jeon further testified that the reason she knew to write the
November 11, 2011 check for precisely $4, 679-the exact
amount identified in the first November 9, 2011 quotation, P.
Ex. 40-is because Jeon had received and reviewed the
quotation identified as P. Ex. 40.
addition, just four months after the August 2012 fire,
Y&J admitted, in a pleading pertaining to a related case
in the Eastern District of Virginia, that the Policy had been
delivered to Y&J in Maryland. See Essex Ins. Co. v.
Y&J Constr., Inc., No. 1:12-cv-1102 (E.D. Va. Dec.
17, 2012) (Answer); P. Exs. 58-59.
August 13, 2012, Y&J, despite having received notice that
the Policy would include a roofing endorsement, nonetheless
used torches in connection with the installation of membrane
roofing on the Fort Belvoir project, which resulted in a fire
causing substantial damage.
Penn paid $3, 749, 315.63 on behalf of its insured, Autumn
Contracting, in connection with the Fort Belvoir fire.
October 2, 2015, Penn initiated the Subrogation Action
against Y&J for $3, 749, 315.63, alleging three counts.
Penn claims to be subrogated to Autumn Contracting's
rights against Y&J pursuant to the Master Subcontracting
Agreement between Y&J and Autumn Contracting.
Specifically, Count I of Penn's Complaint against Y&J
in the Subrogation Action alleges that Y&J negligently
caused damage to the Fort Belvoir building. Count II of
Penn's Complaint against Y&J in the Subrogation
Action alleges breach of contract. Count III in the
Subrogation Action alleges a claim for indemnification.
After the filing of Penn's Subrogation Action, Essex
submitted to Y&J a reservation of rights letter,
reserving the right to deny coverage on the basis of the
Policy's roofing endorsement and/or breach of contract
exclusion. Shortly thereafter, Essex initiated the instant
CONCLUSIONS OF LAW
Jurisdiction exists over the matter and the parties, as there
is diversity subject matter jurisdiction pursuant to 28
U.S.C. § 1332, and the parties are subject to personal
jurisdiction in the Eastern District of Virginia. Venue is
also proper in this district.
Declaratory relief is appropriate, as an actual controversy
exists regarding the existence and extent of any obligations
Essex may owe Y&J and Penn in the underlying Subrogation
Action. Because there is no adequate legal remedy, other than
declaratory relief, by which this controversy may be
resolved, it is appropriate to award declaratory relief
pursuant to 28 U.S.C. § 2201 and Rule 57, Fed. R. Civ.
Insurance Plus was the agent of Essex, not Y&J, by virtue
of Va. Code § 38.2-1801A.
Maryland law governs the interpretation of the Policy, as
that is the place where the Policy was written, mailed, and
delivered. This result follows from the well-settled rule
that a federal court sitting in diversity applies the
conflict of law rules of the state in which the court sits.
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,
496 (1941). And under Virginia's conflict of law rules,
“[q]uestions concerning the validity, effect, and
interpretation of a contract are resolved according to the
law of the state where the contract was made.”
Seabulk Offshore v. Am. Home Assur. Co., 377 F.3d
408, 419 (4th Cir. 2004) (applying Virginia law). In this
respect, “[u]nder Virginia law, a contract is made when
the last act to complete it is performed, and in the context
of an insurance policy, the last act is the delivery of the
policy to the insured.” Id. Importantly,
“[w]hen an insurer mails a contract of insurance to its
agent for unconditional delivery to the insured, delivery is
effected when deposited in the mail.” Rose v.
Travelers Indem. Co., 167 S.E.2d 339, 342 (Va. 1969).
Thus, because Va. Code § 38.2-1801A renders Insurance
Plus the agent of Essex, and because the Policy was mailed
from Maryland, delivery became effective in Maryland, and
thus Maryland law governs the validity, effect, and
interpretation of the Policy.
Under Maryland law, “when deciding the issue of
coverage under an insurance policy, the primary principle of
construction is to apply the terms of the insurance contract
itself.” Bausch & Lomb, Inc. v. Utica Mut. Ins.
Co., 625 A.2d 1021, 1031 (Md. 1993). In general, the
words of the policy are given “their usual, ordinary,
and accepted meaning, ” i.e., the “meaning a
reasonably prudent layperson would attach to the term.”
Id. If the language of the insurance contract is
“clear and unambiguous, ” then the presumption is
“that the parties meant what they actually said,
regardless of what they may have intended.” Aetna
Ins. Co. v. Aaron, 685 A.2d 858, 864 (Md. Ct. Spec. App.
1996). Notably, “Maryland does not follow the rule,
adopted in many jurisdictions, that an insurance policy is to
be construed most strongly against the insurer.”
Bausch & Lomb, Inc., 625 A.2d at 1031.
issue, therefore, in this case is whether Essex has, pursuant
to the Policy, (i) a duty to pay Y&J or Penn in the event
of a judgment against Y&J in the Subrogation Action, or
(ii) a duty to defend Y&J in the Subrogation Action.
in other jurisdictions, under Maryland law “[t]he
‘duty to defend is broader than and different from the
duty to pay, '” as the duty to defend operates
“if the claim asserted against the insured is covered,
or even potentially covered, by the applicable insurance
policy.” Aetna Ins. Co., 685 A.2d at 863
(quoting Luppino v. Vigilant Ins. Co., 677 A.2d 617,
622 (Md. Ct. Spec. App. 1996)).
Count I of Penn's Complaint against Y&J in the
Subrogation Action alleges that Y&J negligently caused
damage to the Fort Belvoir building. In this respect, Penn
seeks to recover for “property damage” that
“ar[ose] out of . . . operations involving . . . torch
or heat application, ” which is not covered by the
Policy. See Policy M/E-191 (4/99). Put simply,
because the fire was caused by Y&J's use of torches
during the installation of rubber membrane, Essex has no duty
to defend or indemnify Y&J with respect to Count I of the
is so because Count I of Penn's subrogation lawsuit seeks
to recover for damages resulting from physical injury to
tangible property, namely Building 207 at Fort
Belvoir. Importantly, the term “property
damage” has a special meaning that is set out in
Section V of the Policy. See Policy, CG 00 0112 07,
at 1. Indeed, “property damage”
under the Policy means, inter alia,
“[p]hysical injury to tangible property, including all
resulting loss of use of that property.” Id.
at 15. Thus, the damage identified in Count I of the
Subrogation Action falls squarely within the ambit of the
Policy's roofing endorsement.
Next, Penn's claims against Y&J in Counts II (breach
of contract) and III (indemnification) of the Subrogation
Action are both premised on breaches of the written Master
Subcontract Agreement between Y&J and Autumn Contracting.
See Pa. Nat'l Mut. Cas. Ins. Co. v. Y&J Constr.,
Inc., No. 15-cv-1283 (E.D. Va. Oct. 2, 2015)
(Complaint), ¶¶ 26-35. Essex has no duty to defend
or pay based on these Counts, either, because the Policy
includes a broad exclusion for claims arising out of breach
Specifically, the Policy's combination general
endorsement provides in relevant part: “This insurance
does not apply to claims arising out of breach of contract,
whether written or oral, express or implied, implied-in-law,
or implied-in-fact contract.” See Policy, MEGL
0001 05 10, § 1.
Accordingly, Counts II and III of Penn's Subrogation
Action against Y&J fall squarely within the plain
language of the Policy's breach of contract exclusion,
and thus Essex has no obligation to defend Y&J or to pay
Penn in the event that Penn secures a judgment against
Y&J on Count II, Count III, or with respect to the
underlying fire at the Fort Belvoir project.
Moreover, Penn is not entitled to reformation of the
Policy's roofing endorsement.
begin with, Maryland law applies to the question of
reformation, as the equitable remedy of reformation of
contract relates to the nature and interpretation of the
Under Maryland law, reformation is an equitable remedy
“warranted only when one of two circumstances exist:
‘either there must be mutual mistake, or there must be
fraud, duress, or inequitable
conduct.'” The party seeking reformation must
adduce “clear, convincing and satisfying proof of a
mutual understanding and bargain that has not been accurately
expressed.” Importantly, “no party has a right
to rescind or modify a contract merely because he or she
finds, in the light of changed conditions, that he or she has
made a bad deal.”
a threshold matter, Penn has standing to seek reformation of
the Policy as an intended third-party beneficiary of that
contract with a right to sue on the Policy's
terms. Indeed, as required by both Virginia and
Maryland law, the Policy includes a provision permitting a
“person or organization” to sue Essex on the
Policy's “Coverage Part [so long as] all of its
terms have been complied with.” Policy at ¶ 00
0112 07 § 3. Relatedly, the Policy provides that
“[a] person or organization may sue [the insurer] to
recover on an agreed settlement or on a final judgment
against an insured, ” so long as the damages are
“payable under the terms of [the Policy] and [not] in
excess of the applicable limit of insurance.”
Id. Thus, Penn may seek reformation.
Although Penn has standing to seek reformation, Penn's
reformation claim is properly limited to reformation based
solely on mutual mistake; in other words, Penn is not
entitled to reformation on the ground of fraud, duress, or
inequitable conduct, because Penn did not properly plead
those grounds in its Answer or in any counterclaim. Rather,
the Answer pled mutual mistake of fact-not
reformation based on fraud, duress, or inequitable conduct-as
an affirmative defense. See LaSalle Bank, N.A. v.
Reeves, 173 Md.App. 392, 412 (Md. Ct. Spec. App. 2007)
(“A proper case for the reformation of instruments must
be made by the pleadings, and, in order to make out a good
cause of action, the pleading should allege in clear . . .
language . . . every element necessary to entitle the
complainant to equitable relief.”); Pleading Causes
of Action in Maryland § 2.23 at 126. Indeed, the
“right to reformation must be properly raised by the
pleadings. As in other actions, all facts necessary to make
out a case must be pleaded . . . .” 66 Am. Jur. 2d
Reformation of Instruments § 100. Because Penn did not
plead or seek reformation based on fraud, duress, or
inequitable conduct in its Answer or in a counterclaim, Penn
is not entitled to reformation based on those
even assuming, arguendo, that Penn properly pled
both theories of reformation, Penn's reformation claim
would nonetheless fail.
begin with, Penn's reformation claim fails insofar as
Penn contends that a mutual mistake of fact existed. This is
so because the trial record clearly reflects that Essex knew
of the roofing endorsement. Thus, there was no mutual
mistake. See, e.g., Flester v. Ohio Cas. Ins.
Co., 307 A.2d 663, 669-70 (Md. 1973) (denying
reformation where the evidence did not “conclusively
establish” a mutual mistake).
the extent Penn asserts that reformation is appropriate based
on a unilateral mistake, this argument also fails, as Penn
has not shown by clear and convincing evidence that there was
“fraud, duress, or inequitable conduct.”
Jaguar, 738 F.Supp.2d at 650.
Y&J did not act under duress, as there was no evidence to
suggest any duress whatsoever.
did Penn meet its burden to demonstrate fraud or inequitable
conduct, because Y&J was put on notice of the roofing
endorsement in the Policy before Y&J decided to purchase
the Policy. See Findings of Fact
¶¶ 28-38. Indeed, Essex's disclosures foreclose
Penn's reformation claim.
this regard, the evidence reveals that it is more likely true
than not that Insurance Plus forwarded two policy quotations
to Y&J before Y&J purchased the Policy. Importantly,
Penn's own witness-Ms. Jeon herself-admitted that before
Y&J purchased the Policy, she had been informed of and
received these quotations, which stated in pertinent part:
a. “Please read quote carefully as coverages being
offered may be more limited than coverages requested, ”
P. Ex. 40;
b. “Our quotation may differ from the terms requested
in the submission. Please review our quotation carefully,
” P. Ex. 41; and
c. “Please review form ME191 for the types of roofing
exposures that we exclude.” Id. (bolded
emphasis in original).
Given Essex's (and Insurance Plus's) repeated
disclosures and the warnings regarding the roofing
endorsement, Penn cannot establish by clear and convincing
evidence that the equitable remedy of reformation is
Moreover, Penn falls far short of meeting its burden to show
fraud or inequitable conduct in light of Y&J's
admission in a previous lawsuit that the Policy had been
delivered to Y&J in Maryland. See Findings of
Fact ¶ 41.
sum, given (i) that it is more likely true than not that
Insurance Plus, consistent with its regular practice over the
last 25 years, forwarded relevant documents and discussed
exclusions from coverage with Y&J before Y&J
purchased coverage, (ii) that Ms. Jeon admitted to having
received, before Y&J purchased the Policy, insurance
quotations warning of the roofing endorsement, and (iii) that
Y&J admitted in a previous lawsuit that the Policy was
delivered in Maryland, this evidence persuasively establishes
that there was no fraud or inequitable conduct. That Ms. Jeon
neglected to heed numerous clear, enlarged, and bolded
statements regarding the roofing endorsement is not
inequitable or fraudulent conduct on the part of Essex or its
agents warranting reformation of the Policy or the roofing
Thus, Essex is entitled to a declaratory judgment stating the
a. Essex has no obligation to defend Y&J in Penn's
Subrogation Action against Y&J;
b. Essex has no obligation to indemnify Y&J for any
judgment, settlement, or recovery in the Subrogation Action;
c. Essex has no obligation to Penn, including any obligation
to indemnify Penn, with respect to any subrogation rights
Penn possesses as a result of Penn's payment on behalf of
its insured resulting from the Fort Belvoir fire caused by
Essex is entitled to the declaratory relief it seeks. An
appropriate Order will issue in accordance with these
Findings of Fact and Conclusions of Law.
 Fort Belvoir is a United States Army
 Y&J is currently in default in the
instant action, and plaintiff's motion for default
judgment has been deferred pending resolution of the bench
trial in this case.
28 U.S.C. § 2201(a) does not
provide a basis for subject matter jurisdiction. See,
e.g., Skelly Oil Co. v. Philips Petrol. Co.,
339 U.S. 667, 671 (1950). But subject matter jurisdiction
nonetheless exists here as the parties are of diverse
citizenship and the amount in controversy exceeds $75, 000.
See 28 U.S.C. § 1332(a).
As of June 30, 2016, Evanston Insurance
Company is the successor by merger to Essex.
 Y&J is now defunct, as it was
dissolved following the Fort Belvoir fire.
 Surplus lines insurance exists for
risks that do not typically fit the insurance market. As a
surplus lines insurer, Essex does not directly solicit
business from entities seeking coverage.
 Penn's argument is puzzling in
this respect, because if the Policy was never delivered to
Y&J, then there is no insurance contract between Essex
and Y&J. See Res. Bankshares Corp. v. St. Paul
Mercury Ins. Co., 407 F.3d 631, 635 (4th Cir. 2005)
(under Virginia law, “a contract is made when the last
act to complete it is performed, and in the context of an
insurance policy, the last act is the delivery of the policy
to the insured.”); Encompass Home & Auto Ins.
Co. v. Harris, 93 F.Supp.3d 424, 432 (D. Md. 2015)
(under Maryland law, once the premium has been paid,
“the last act necessary for formation of the contract
is the delivery of the [insurance] policy” (citing
cases)). Of course, if no contract of insurance ever existed
for lack of delivery, then Essex owes no obligation to
Y&J, and thus Essex would be entitled to the declaratory
relief sought in the instant action.
 See Tr., Day 2,
13:22-25-14:1-3 (“THE COURT: Is your receipt of [P. Ex.
40] before you wrote the check, is that how you knew how much
the check should be for and to whom the check should be
written?” THE WITNESS: Yes. I am so sorry I was so
stupid. I cannot remember, but probably I wrote the check
amount, I mean, as I was asked.”). The witness, after
several substantial pauses, subsequently stated that she
wrote the check based on what Mr. Yang of Insurance Plus had
told her, but she could not remember if he had advised her in
person, by phone, or via email. Id. 14:8-23. Ms.
Jeon later testified, however, that Mr. Yang had provided her
a copy of that quotation (P. Ex. 40), probably via email.
Id. 31:19-25-32:1-11. Based on the witness's
initial answer, subsequent pauses, demeanor, and selective
memory, it is more likely true than not that Ms. Jeon's
first answer-that she knew to write a check worth $4, 679
because she had received P. Ex. 40-is the accurate and
 This provision states that “[a]
licensed agent shall be held to be the agent of the insurer
that issued the insurance sold, solicited, or negotiated by
such agent in any controversy between the insured or his
beneficiary and the insurer.” Va. Code. §
38.2-1801A. In this regard, § 38.2-1800 defines a
“licensed agent” as “an individual or
business entity licensed in the Commonwealth to sell,
solicit, or negotiate contracts of insurance or annuity of
the classes authorized within the scope of such
license.” Id. § 38.2-1800. Insurance Plus
unquestionably meets the definition of a “licensed
agent, ” as Insurance Plus has a license to sell,
solicit, and negotiate insurance contracts in Virginia and,
in fact, negotiated and solicited the Policy from an office
in Virginia. Thus, Insurance Plus must, pursuant to Virginia
statute, be deemed the agent of Essex.
Seeking to avoid this result, Essex argues that §
38.2-1801A does not apply because (i) the Policy was written
and delivered in Maryland, and (ii) section 38.2-1801A lies
outside the scope of the Virginia Insurance Code's
provisions regarding surplus lines insurance. Neither
argument is persuasive. First, regardless where the Policy
was underwritten or delivered, Insurance Plus is undoubtedly
a licensed agent pursuant to § 38.2-1800, and indeed
Insurance Plus prepared Y&J's insurance application
from Insurance Plus's Virginia office; moreover, the
statute does not require that an insurance contract be
written or delivered in Virginia for § 38.2-1801A to
apply to an agent's conduct in Virginia. See,
e.g., Travelers Indem. Co. of Am. v. Miller Bldg.
Corp., No. 3:03-CV-441, 2003 WL 23512080, at *3 (E.D.
Va. Dec. 24, 2003) (“[Section] 38.2-1801 is not a
choice of law provision, but rather an agency law
provision.”), rev'd on other grounds, 142
F. App'x 147 (4th Cir. 2005). Second, § 38.2-4815
makes clear that “[e]xcept as otherwise provided . . .
the provisions relating to the licensing and control of
surplus lines brokers shall have no effect on or in any way
alter any of the other provisions of this title, ” and
there is no indication that § 38.2-1801A has been
circumscribed by the provisions relating to surplus lines
brokers. See Va. Code. § 38.2-4815.
To be sure, this result appears to create an anomaly,
as there were in fact two middlemen-Insurance Plus
and All Risks-who negotiated the Policy on behalf of Y&J
and Essex, respectively. Thus it seems odd to hold Insurance
Plus as an agent of the insurer when (i) Insurance Plus was
contacted by the insured and proceeded to negotiate on behalf
of the insured, and (ii) the insurer had its own agent, All
Risks, to negotiate on the insurer's behalf. In any
event, although the parties have spilled substantial ink on
the question of agency, whether Insurance Plus is the agent
of Essex or Y&J is immaterial to the ultimate disposition
of the instant case.
 Some Virginia cases have indicated
that the place where a contract was written is also
instructive with respect to the source of governing law.
See Buchanan v. Doe, 431 S.E.2d 289, 291 (Va. 1993)
(“[T]he law of the place where an insurance contract is
written and delivered controls issues as to its
coverage.”). Of course, because the Policy was written
in Maryland, the Supreme Court of Virginia's decision in
Buchanan further supports the conclusion that
Maryland law governs the validity, effect, and interpretation
of the Policy.
 Even assuming, arguendo,
that Insurance Plus was the agent of Y&J, Maryland law
would still control the interpretation of the contract, as
the trial record unambiguously discloses that the Policy was
sent to Insurance Plus in Maryland, and thus, under the
principle of constructive delivery, the Policy still would
have been delivered in Maryland. See, e.g.,
Rose, 167 S.E.2d at 342 (“When an insurer
mails a contract of insurance . . . for unconditional
delivery to the insured, delivery is effected when deposited
in the mail.”); see also 16 Williston on
Contracts §§ 49:62-65 (4th ed. 2015) (delivery
occurs when the insurer manifests an intention to give the
policy legal effect by taking some visible step to put the
policy beyond the insurer's control); 1A Couch on
Insurance § 14:12 (3d ed. June 2016 Update)
(similar). And to the extent Penn argues that there was no
delivery whatsoever, then Essex would be entitled to the
declaratory relief it seeks on the ground that Y&J had no
insurance contract to begin with. See supra note
 See Pa. Nat'l Mut. Cas. Ins.
Co. v. Y&J Constr., Inc., No. 15-cv-1283 (E.D. Va.
Oct. 2, 2015) (Complaint), ¶ 15 (“The fire spread
throughout the roof causing substantial damages to the Fort
Belvoir building”); ¶ 16 (“As a result of
the fire . . . the Department of the Army demanded . . .
repairs be performed by Autumn Contracting, Inc.”);
¶ 23 (“As a direct and proximate result of
[Y&J's] negligent acts and omission the Fort Belvoir
building caught fire resulting in damages[.]”).
 It is well-settled that where
“there is an indication that the parties intended to
use words in the policy in a technical sense, ” that
technical sense applies. Bausch & Lomb, Inc.,
625 A.2d at 1031.
 Although neither party has cited a
Maryland case with materially similar facts, the
interpretation and conclusion reached here accords with the
interpretation and conclusion of the Louisiana Court of
Appeals, which applied legal principles nearly identical to
those under Maryland law to construe the exact same roofing
endorsement language in issue here as excluding coverage for
property damage arising from a residential fire caused in the
course of roofing work using a torch. See generally
Encompass Ins. Co. v. Gammon Roofing, LLC, 996 So.2d 16
(La. Ct. App. 2008). Although Encompass is not
binding in the instant action, the reasoning there is
persuasive and firmly supports the conclusion reached with
respect to the Policy's coverage for the Subrogation
Action against Y&J for negligence.
 The other breach of contract
exclusion is in the main body of the Policy and contains two
exceptions. See Policy, CG 00 0112 07, at 2. Because
the combination general endorsement more straightforwardly
resolves this case, the exclusion in the main body of the
Policy need not be considered.
 See Roberts v. USAA Cas. Ins.
Co., 173 F.3d 425 (4th Cir. 1999) (Table Decision)
(applying law governing contract to reformation claim);
Charter Oak Fire Co., v. Am. Capital, Ltd., No. DKC
09-0100, 2016 WL 827380 (D. Md. Mar. 3, 2016) (same). Even if
Virginia law applied to the question of reformation, the
analysis under Virginia law is essentially the same as the
analysis under Maryland law. See infra note
 Jaguar Land Rover N.A., LLC v.
Manhattan Imported Cars, Inc., 738 F.Supp.2d 640, 650
(D. Md. 2010) (quoting Md. Port Admin. v. John W. Brawner
Contracting Co., 492 A.2d 281, 288 (Md. 1985)). Virginia
law applies an essentially identical standard. See Ward
v. Ward, 387 S.E.2d 460, 462 (Va. 1990) (“The
equitable remedy of reformation . . . provides relief against
a mistake of fact in a written instrument in only two
instances. The first is where the mistake is mutual . . . .
The second is where there is mistake on the part of only one
party, that is, the mistake is unilateral, but it is
accompanied by misrepresentation and fraud perpetrated by the
other.” (quotation marks and alterations omitted));
Bankers Fire Ins. Co. v. Henderson, 83 S.E.2d 424,
429 (Va. 1954) (“It is well settled that equity has
jurisdiction to reform written instruments (1) [w]here there
has been an innocent omission or insertion of a material
stipulation, contrary to the intention of both parties, and
under a mutual mistake; and (2) where there has been a
mistake of one party accompanied by fraud or other
inequitable conduct of the remaining parties.”
(quotation marks omitted)).
 City of Baltimore v. De
Luca-Davis Constr. Co., 124 A.2d 557, 560 (Md.
 Janusz v. Gilliam, 947 A.2d
560, 567 (Md. 2008) (alterations omitted).
See, e.g., Int'l
Serv. Ins. Co. v. Gonzales, 194 Cal.App.3d 110, 118-19
(Cal.Ct.App. 1987) (“Reformation of a liability
insurance policy may be sought only by the contracting
parties, their assignees or the intended beneficiaries of the
 Cf. Md. Code. Ins. §
19-102(b)(2) (requiring each liability insurance policy
issued in Maryland to provide that “if an injured
person . . . is unable, after execution on a final judgment
entered in an action against an insured, to recover the full
amount of the final judgment, the person may bring an action
against the insured's insurer in accordance with the
terms of the policy for the lesser of the amount of the
judgment recovered in the action against the insured or the
amount of the policy”); Va. Code § 38.2-2200(2)
 In fact, Penn did not specifically
plead “reformation” at all. Yet, because Penn
pled a mutual mistake of fact, it is appropriate to consider
whether Penn is entitled to reformation based on a mutual
mistake of fact.
 Penn contends that Insurance Plus
“defrauded” Y&J because, according to Penn,
Insurance Plus falsely claimed to have submitted
Y&J's insurance application to three standard
insurance carriers before seeking to procure insurance from a
surplus lines insurer. D. Br. (Doc. 115) at 27. This point is
irrelevant, as there is no evidence in the record that these
alleged misrepresentations were material or that Y&J
relied on them. Indeed, these alleged misrepresentations have
no bearing on Y&J's awareness of a roofing
endorsement in the Policy. Cf. Prospect Dev. Co. v.
Bershader, 515 S.E.2d 291, 297 (Va. 1999) (actual and
constructive fraud require clear and convincing evidence of a
misrepresentation of material fact and detrimental
 See, e.g.,
Bershader, 515 S.E.2d at 297 (elements of actual or
constructive fraud require false misrepresentation
of material fact); Bankers Fire Ins. Co. v.
Henderson, 83 S.E.2d 424, 429 (Va. 1954)
(“Inequitable conduct, as applied to cases on contracts
calling for reformation consists in doing acts, or omitting
things, or the making of representations, tending naturally
to deceive as to the true interpretation of the contract,
which the court finds to be unconscionable.” (quotation
marks and alterations omitted)); Mgmt. Enters., Inc. v.
Thorncroft Co., Inc., 416 S.E.2d 229, 231 (Va. 1992) (an
inequitable and unconscionable bargain is one “that no
man in his senses and not under a delusion would make, on the
one hand, and as no fair man would accept, on the other. The
inequality must be so gross as to shock the
conscience.” (quotation marks omitted)).
 That same document discloses that
form ME191 involves roofing endorsements. P. Ex. 41.
 Seeking to avoid this result, Penn
argues that it was inequitable for Essex to include a roofing
endorsement in the first instance, because Y&J had
disclosed in its insurance application an intention to use of
torches on the Fort Belvoir project. But, the quotations that
Y&J's president admitted to having received before
purchasing the Policy specifically stated that the Policy
could differ from the terms requested in Y&J's
submission; indeed, the quotations directed Y&J to read
the quotations carefully. P. Exs. 40, 41. Put simply,
Penn's argument misses a fundamental point: insurance
contracts operate like “contracts generally, ”
and the parties are free to reach an agreement not
to cover certain activities. See Bausch & Lomb,
Inc., 625 A.2d at 1031 (applying ordinary contract
principles to insurance contracts); Mitchell v. AARP Life
Ins. Program, 779 A.2d 1061, 1069-70 (Md. Ct. Spec. App.
2001) (an insurance application is a mere offer).
Thus, there was no inequitable conduct by Essex or its
agents, as the evidence established that Y&J accepted an
offer without reading the documents that Essex and its agents
had disclosed to Ms. Jeon.
Alternatively, Penn contends that it was fraudulent or
inequitable for Insurance Plus to send Y&J a certificate
of insurance that did not disclose the roofing endorsement.
This argument also misses the mark; a certificate of
insurance is not-and does not create-an insurance contract,
nor must a certificate contain all the terms of an insurance
policy. See, e.g., James G. Davis Constr. Corp.
v. Erie Ins. Exchange, 126 A.3d 753, 760 (Md. Ct. Spec.
App. 2015) (holding that a certificate of liability insurance
is not part of the liability policy and not binding on the
insurer where, as here, the certificate clearly states that
it is not the insurance policy). Indeed, to adopt Penn's
logic in the instant case would lead to the absurd result
that the certificate of insurance operated to displace the
Policy, a result foreclosed by Maryland and Virginia