                              PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                             No. 14-1239


CAPITAL CITY REAL ESTATE, LLC,

                Plaintiff - Appellant,

           v.

CERTAIN UNDERWRITERS AT LLOYD’S         LONDON,   Subscribing   to
Policy Number: ARTE018240,

                Defendant - Appellee.



Appeal from the United States District Court for the District of
Maryland, at Baltimore.     Marvin J. Garbis, Senior District
Judge. (1:13-cv-01384-MJG)


Argued:   January 29, 2015                  Decided:   June 10, 2015


Before WILKINSON, GREGORY, and SHEDD, Circuit Judges.


Vacated and remanded with instructions by published opinion.
Judge Gregory wrote the opinion, in which Judge Wilkinson and
Judge Shedd joined.


ARGUED: Robert Lawrence Ferguson, Jr., FERGUSON, SCHETELICH
& BALLEW, PA, Baltimore, Maryland, for Appellant.    Georgia S.
Foerstner, CLARK & FOX, Cherry Hill, New Jersey, for Appellee.
ON BRIEF: Ann D. Ware, FERGUSON, SCHETELICH & BALLEW, PA,
Baltimore, Maryland, for Appellant. John M. Clark, CLARK & FOX,
Cherry Hill, New Jersey, for Appellee.
GREGORY, Circuit Judge:

     Capital City Real Estate, LLC (“Capital City”) initiated

this declaratory judgment action in the District of Maryland,

seeking    a    declaration      that    Certain         Underwriters       at   Lloyd’s

London (“Underwriters”) were obligated to defend and indemnify

Capital City against a negligence lawsuit filed in the Superior

Court for the District of Columbia.                   The district court granted

summary judgment in favor of the Underwriters, concluding that

it had no duty to defend or indemnify Capital City.                         Because the

district       court   erred     in    granting       summary      judgment      to    the

Underwriters, we vacate and remand.



                                          I.

     Central to this dispute is the common wall shared by the

structures located at 55 Bryant Street, NW, Washington, DC (“55

Bryant Street”) and 57 Bryant Street, NW, Washington, DC (“57

Bryant    Street”).       55    Bryant    Street         was   owned   by   Leon      Yates

(“Yates”) and insured by The Standard Fire Insurance Company

(“Standard      Fire”).        Capital    City,      a     real   estate    development

company with its principal place of business in Washington, DC,

was operating as the general contractor for the renovation of 57

Bryant Street in 2008 and 2009.

     Capital City subcontracted the foundation, structural, and

underpinning      work    for    the     57       Bryant    Street     renovations      to

                                              2
Marquez Brick Work, Inc. (“Marquez”), a “corporation engaged in

the business of concrete, bricks, blocks, and foundation work

with its principal place of business located in Maryland.”                          J.A.

268.     “The subcontract between Capital City and Marquez Brick

required Marquez Brick to indemnify Capital City for damages

caused    by    its   [Marquez’s]       work   and   further    required       Marquez

Brick    to    maintain    certain      general   liability        insurance    naming

Capital City as an additional insured.”                   J.A. 269.     Accordingly,

on   November       17,   2008,   the    Underwriters       issued    an    insurance

policy (the “Policy”) to Marquez, effective from November 17,

2008,    through      November    17,     2009.       In     December      2008,     the

Underwriters also issued an Endorsement (the “Endorsement”) to

the Policy listing Capital City as an additional insured party

on the Policy.        As relevant to this case, the Endorsement amends

the Policy to cover Capital City as an additional insured,

       but only with respect to liability for . . . “property
       damage” . . . caused in whole or in part by:

               1. [Marquez’s] acts or omissions; or

               2.   The acts or omissions            of    those    acting     on
                    [Marquez’s] behalf;

       in the performance of [Marquez’s] ongoing operations
       for [Capital City in Washington, D.C.].

J.A. 109.

       On June 9, 2009, during the course of Marquez’s work on the

underpinning of 57 Bryant Street, the common wall shared by 57

Bryant Street and 55 Bryant Street collapsed.                        Capital City’s

                                           3
insurer sent a letter to the Underwriters notifying them of the

collapse, and tendering to the Underwriters “all claims that are

being or will be asserted by Mr. Yates and/or others” as a

result of the incident.           J.A. 161.             No response was received to

either    the     initial     letter,    or       to    several       letters    and   emails

subsequently sent by counsel for Capital City.

     On June 7, 2012, Standard Fire, as subrogee, filed suit

against 57 Bryant Street, NW Limited Partnership, Bryant St.,

LLC, and Capital City in the Superior Court for the District of

Columbia.          Standard      Fire     alleges         in        its    complaint       (the

“underlying       complaint”)      that       Capital          City       applied    for     and

obtained    from       the   District    of       Columbia      a     building      permit    to

perform renovations at 57 Bryant Street.                        Standard Fire further

alleges that “[t]he plan submitted to the District of Columbia

did not detail the excavation details or any plans for providing

any underpinning support or other support to the common walls

and other structures of the premises.”                     J.A. 80.          The underlying

complaint       does    not    mention    Marquez          or    explicitly         seek     any

damages for any of its acts or omissions.                        Rather, the complaint

attributes the June 9, 2009 collapse and resulting damage to 55

Bryant Street to negligence on the part of the named defendants.

J.A. 81 (“The failure of the Defendants to properly excavate and

support     the     structure     located          at     57    Bryant        Street       . . .

constitutes negligence in that they failed to comply with the

                                              4
applicable        standard           of         care        while         performing          said

renovations.”).          Standard         Fire       paid   for     the    repairs     per      its

insurance policy with Yates, and requested $600,000 in damages,

plus attorney’s fees, costs, and interest.

      Capital     City   responded          in       part   by    filing       a   third    party

complaint against both Marquez and its owner, Feliciano Marquez.

Capital City alleges that its contract with Marquez requires

Marquez     “to   pay    for     defending           and    indemnify          [Capital     City]

against     all   claims       for    liability         that      were     a    result     of   or

partially resulting from Marquez’s breach of any term of the”

contract, and also requires “that if [Capital City] is sued and

the subject of the suit is [Marquez’s] work or the direct or

indirect result of it, [Marquez] shall indemnify [Capital City]

against all liabilities” and reimburse it for any damages or

fees.     J.A. 89.

      Thereafter, counsel for the Underwriters responded by email

and indicated that the tender of claims was under review.                                        On

April 13, 2013, counsel for the Underwriters sent a letter to

counsel for Capital City denying coverage.

      Capital City then filed this declaratory judgment action on

May   10,    2013    against         the    Underwriters            in    the      District     of

Maryland,     seeking      a     declaration            from      the      court     that       the

Underwriters      have     a    duty       to    defend      Capital       City      under      the

Policy.     The parties filed cross-motions for summary judgment,

                                                 5
and   the     district       court       ruled    in    favor   of    the     Underwriters.

Capital City timely filed this appeal.



                                               II.

       Our review of a district court’s grant of summary judgment

is de novo.             French v. Assurance Co. of Am., 448 F.3d 693, 700

(4th Cir. 2006).            “Summary judgment is appropriate when there is

no    genuine      issue     of     material      fact    and   the      moving     party    is

entitled to judgment as a matter of law.”                          Id.      Here, we apply

Maryland law because the Policy was delivered in Maryland and

this diversity action was filed in the District of Maryland.

Klaxon      Co.    v.     Stentor    Elec.       Mfg.    Co.,   313    U.S.    487,    496-97

(1941)      (holding        that     a    federal       court   exercising          diversity

jurisdiction applies the choice of law principles of the state

where    the       federal    court       is     located);      Perini/Tompkins            Joint

Venture v. Ace Am. Ins. Co., 738 F.3d 95, 100 (4th Cir. 2013)

(“In insurance contract disputes, Maryland follows the principle

of    lex     loci        contractus,       which        applies      the     law     of     the

jurisdiction where the contract was made.                             For choice of law

purposes, a contract is made where ‘the last act is performed

which makes the agreement a binding contract.                             Typically, this

is    where       the    policy     is    delivered       and   the      premiums     paid.’”

(citation omitted)).



                                                 6
      Capital City advances two arguments on appeal.           First, it

contends that the district court erred in concluding that the

Underwriters would have a duty to defend only if the underlying

complaint had alleged that Capital City was vicariously liable

for   the   actions   of   its   subcontractor.   Second,   Capital   City

argues that the district court should have made clear that, if

the Underwriters owe it a duty to defend, then Capital City is

entitled to recover expenses, including attorney’s fees.



                                     III.

      In determining whether an insurer has a duty to defend under

an insurance policy, Maryland courts apply the following test:

      (1) what is the coverage and what are the defenses
      under the terms and requirements of the insurance
      policy?   (2) do the allegations in the tort action
      potentially bring the tort claim within the policy’s
      coverage?     The first question focuses upon the
      language and requirements of the policy, and the
      second question focuses on the allegations of the tort
      suit.   At times these two questions involve separate
      and distinct matters, and at other times they are
      intertwined, perhaps involving an identical issue.

St. Paul Fire & Marine Ins. Co. v. Pryseski, 438 A.2d 282, 285

(Md. 1981).    We address the two steps of the test in turn.

                                      A.

      We first must determine the scope of coverage under the

Policy’s terms and conditions.         Pryseski, 438 A.2d at 285.     With

respect to interpretation of the Policy language and terms, we


                                      7
note that, “[u]nlike the majority of other states, Maryland does

not   follow    the    rule    that      insurance   policies      are   to    be   most

strongly construed against the insurer.”                    Empire Fire & Marine

Ins. Co. v. Liberty Mut. Ins. Co., 699 A.2d 482, 494 (Md. 1997).

Rather,   Maryland      law    applies      ordinary      contract    principles      to

insurance      contracts.          Id.     “Nevertheless,        under   the   general

principles of contract construction, if an insurance policy is

ambiguous,      it    will    be    construed    liberally       in   favor    of   the

insured and against the insurer as drafter of the instrument.”

Id.

      “If the policy’s language is clear and unambiguous, the

Court will assume the parties meant what they said.                      As with any

contractual      dispute,          we    start   with      the    relevant      policy

provisions.”         Perini/Tompkins, 738 F.3d at 101 (quotation marks

and ellipsis omitted); see also Prince George’s Cnty. v. Local

Gov’t Ins. Trust, 879 A.2d 81, 88 (Md. 2005) (“In interpreting

an insurance policy, as with any contract, the primary task of

the circuit court is to apply the terms of the policy itself.”).

As with other contracts, “we analyze the plain language of [an

insurance] contract according words and phrases their ordinary

and accepted meanings as defined by what a reasonably prudent

lay   person     would       understand      them    to    mean.”        Kendall     v.

Nationwide Ins. Co., 702 A.2d 767, 771 (Md. 1997).                       In so doing,

we read the Endorsement and the Policy together as a single

                                            8
contract.     Local Gov’t Ins. Trust, 879 A.2d at 88 (“In general,

the main insurance policy and an endorsement constitute a single

insurance contract, and an effort should be made to construe

them harmoniously.”).           However, “[i]f the endorsement conflicts

with the main policy, the endorsement controls.”                             Id.

      Here, the relevant portion of the Policy is the Endorsement

itself.      The Endorsement in this case is the form provided by

the Insurance Services Office, Inc. (“ISO”) which “is the almost

exclusive     source    of     support       services         in        this     country    for

[commercial general liability] insurance.”                             Hartford Fire Ins.

Co.   v.    California,      509    U.S.    764,      772     (1993).           It    “develops

standard policy forms and files or lodges them with each State’s

insurance      regulators;         most     [commercial            general           liability]

insurance     written     in   the    United         States       is    written       on   these

forms.”     Id.    The Endorsement here, the CG 20 10 07 04 Form, was

copyrighted by the ISO in 2004.                 J.A. 109.          It explicitly covers

Capital City as an additional insured for the 57 Bryant Street

renovation     project,      “but    only    with      respect          to     liability    for

. . . ‘property damage’ . . . caused in whole or in part by:

1. [Marquez’s] acts or omissions; or 2. The acts or omissions of

those acting on [Marquez’s] behalf.”                   J.A. 109.

      The    Maryland     Court      of     Appeals         has        not     construed    the

Endorsement       language     presented        in    this     case.            However,    the

language is quite clear that coverage is provided for Capital

                                            9
City,   as    the     additional    insured,       for    “property      damage    . . .

caused in whole or in part by” Marquez.                     The Fifth Circuit has

construed the exact Endorsement language at issue here to mean

that an insurer has a duty to defend an additional insured “only

if the underlying pleadings allege that” the named insured, “or

someone acting on its behalf, proximately caused” the injury or

damage.       Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589,

598   (5th    Cir.     2011).      Insurance       law    commentators      have   also

examined the language at issue and concluded that an additional

insured is covered where a named insured is at least partially

negligent.         See, e.g., Scott C. Turner, Insurance Coverage of

Construction Disputes § 42:4 (2015) (stating that when the “ISO

issued revised versions of its additional insured endorsements”

in    2004,   it     “attempt[ed]      to    narrow      coverage    for    additional

insureds”      such     that    “for    there      to     be    insurance    for    the

additional insured . . . the named insured must be negligent at

least in part”).          We thus conclude that the plain language of

the Endorsement provides for exactly what is says:                         coverage to

Capital City for property damage caused by Marquez, either in

whole or in part.

       The    Underwriters      argue       that   the    scope     of   coverage    is

limited to Capital City’s vicarious liability for Marquez’s acts

or omissions.          However, there is no mention of vicarious or

derivative liability in the Endorsement.                       As the Tenth Circuit

                                            10
recognized in construing the language of the predecessor to the

CG 20 10 07 04 Form, “if the parties had intended coverage to be

limited to vicarious liability, language clearly embodying that

intention was available.”                 McIntosh v. Scottsdale Ins. Co., 992

F.2d 251, 255 (10th Cir. 1993) (original alterations omitted);

see also Am. Empire Surplus Lines Ins. Co. v. Crum & Forster

Specialty Ins. Co., No. Civ. H-06-0004, 2006 WL 1441854, at *7

(S.D. Tex. May 23, 2006) (construing the 2004 CG 20 10 07 04

Form    and    remarking          that   “nothing      in    the   ‘whole       or    in   part’

sentence       of        the    Endorsement       . . .      expressly      limits         . . .

additional insured coverage to derivative or vicarious claims.

. . .     The words ‘derivative’ and ‘vicarious’ are conspicuously

absent from the Endorsement”).                   Turner has observed that “[m]any

insurers      maintain           that    the    coverage      provided      to       additional

insured       is     limited       to     the    additional        insured’s         vicarious

liability      for        the    acts    or    omissions      of   the    named      insured.”

Turner, Insurance Coverage of Construction Disputes § 42:4.                                  But

he rightly notes that “[w]hile it is true that the additional

insured is covered for its vicarious liability stemming from the

named    insured’s             operations,      the    insurer’s        attempt      to    limit

coverage to that alone ignores the language of the additional

insured endorsements.”              Id.

       Ultimately, it is the language of the Endorsement that must

control.           See    Perini/Tompkins,           738    F.3d   at    101.        Here,   the

                                                11
language     of   the    Endorsement        plainly    lacks   the   vicarious

liability limitation that the Underwriters seek to impose.                  Even

if we were to view the Endorsement language as ambiguous, we

would   be   obligated    to   construe       that    ambiguity   against   the

Underwriters, see Empire Fire, 699 A.2d at 494, and to find that

the scope of the Endorsement extends to property damage caused

by Marquez, either in whole or in part, regardless of whether

the underlying complaint seeks to hold Capital City vicariously

liable for Marquez’s acts or omissions.

                                       B.

    Having determined the scope of the Endorsement, the Court

turns to the second question presented by the Pryseski test,

namely whether the “allegations in the tort action potentially

bring the tort claim within the policy’s coverage.”                  Pryseski,

438 A.3d at 285.        As the Maryland Court of Appeals has stated,

“to give effect to the duty to defend where the allegations,

even if groundless, present claims both within and without the

policy coverage the rule in Maryland is that ‘the insurer still

must defend if there is a potentiality that the claim could be

covered by the policy.’”       Continental Cas. Co. v. Bd. Of Educ.,

489 A.2d 536, 542 (Md. 1985) (quoting Brohawn v. Transamerica

Ins. Co., 347 A.2d 842, 850 (Md. 1975)); see also Baltimore Gas

& Elec. Co. v. Commercial Union Ins. Co., 688 A.2d 496, 505-06

(Md. Ct. Spec. App. 1997) (observing that the Maryland Court of

                                       12
Appeals has held that “the duty to defend arises as long as the

plaintiff in a tort case alleges an ‘action that is potentially

covered by the policy, no matter how attenuated, frivolous, or

illogical that allegation may be.’” (quoting Sheets v. Brethren

Mut. Ins. Co., 679 A.2d 540, 543 (Md. 1996)).

       Maryland     courts       generally     look    to   the     pleadings         in   the

underlying lawsuit to determine whether there is a potentiality

of coverage.         Aetna Cas. & Sur. Co. v. Cochran, 651 A.2d 859,

863 (Md. 1995).           While the Maryland Court of Appeals has “held

that    an    insurer     may     not   use    extrinsic         evidence       to   contest

coverage if the tort suit complaint establishes a potentiality

of coverage,” it has set forth a different rule for an insured.

Id. at 863-64.           Specifically, “where a potentiality of coverage

is uncertain from the allegations of a complaint, any doubt must

be    resolved     in    favor    of    the   insured.”          Id.       Moreover,       “an

insured      may    establish      a    potentiality        of    coverage       under     an

insurance policy through the use of extrinsic evidence.”                              Id. at

866; see also Litz v. State Farm Fire & Cas. Co., 695 A.2d 566,

570    (Md.    1997)      (“A     potentiality        of    coverage       is    typically

established        by     the     allegations         in    the     tort        plaintiff’s

complaint.         Sometimes, however, extrinsic evidence may also be

used to establish a potentiality of coverage.                          When extrinsic

evidence, but not the allegations of the complaint, establish a

potentiality        of   coverage,      the    insured      may     rely    on       evidence

                                              13
outside     of       the        complaint.”             (emphasis       added)         (citations

omitted)).         The Maryland Court of Appeals has noted that its

policy ensures that an insured “is not foreclosed from receiving

the   defense       to     which      [it]     is       entitled       merely     because      the

complaint       fails          to     plead        allegations          that     establish       a

potentiality         of        coverage       under        the        insurance        policies.”

Cochran, 651 A.2d at 866.                   However, “an insured cannot assert a

frivolous defense merely to establish a duty to defend on the

part of [its] insurer.”               Id.

      Here,      the      underlying          complaint          is    silent        as   to   the

involvement of Marquez.                 Indeed, Marquez is not named anywhere

in the complaint.              However, Capital City has filed a third party

complaint       against        Marquez       and    its    owner,       and    has     introduced

extrinsic evidence that the collapse of the common wall between

55 Bryant Street and 57 Bryant Street was caused by Marquez.

Given    that      Standard         Fire’s    underlying         complaint       alleges       that

“[t]he    failure         of    the     Defendants         to     properly      excavate       and

support the structure located at 57 Bryant Street” constituted

negligence “in that they failed to comply with the applicable

standard      of     care       while       performing”          the     57    Bryant       Street

renovations, J.A. 81, and given also that Marquez’s involvement

in those renovations is undisputed, it cannot be said that the

complaint does not seek to hold the named defendants liable for

property      damage       “caused       in    whole       or     in    part”     by      Marquez.

                                                   14
Because    the    underlying    complaint       does   not    make    clear    that

Marquez conducted the foundation, structural, and underpinning

work that led to the collapse of the common wall, Capital City

is entitled to rely on its extrinsic evidence to establish those

facts and to thereby establish a potentiality of coverage.                       It

was error for the district court to conclude otherwise.

      The Underwriters urge us to follow the rule set forth in

the Maryland Court of Special Appeals case, Baltimore Gas, which

held that an insurer had no duty to defend where the plaintiffs

in the underlying tort lawsuit dismissed their claims against

all of the defendants except for the general contractor.                        688

A.2d at 511.      But nothing in the Baltimore Gas case contradicts

our     holding   here.    In    that        case,   the   plaintiffs     in    the

underlying lawsuit sued a general contractor, a subcontractor,

and others for injuries suffered after the plaintiffs’ car fell

into an excavation pit.         The court observed that the plaintiffs

in the underlying lawsuit “[u]ltimately . . . chose to pursue

their claim only against BGE[, the general contractor], on the

theory that BGE was solely responsible for the occurrence” at

issue in the case “because of its own negligence.”                    Id. at 507.

The tort plaintiffs thus “expressly redefined their theory of

BGE’s    liability.”      Id.      The       court   stated    that    “the    tort

plaintiff’s [sic] allegations are central to the determination

of coverage.”     Id. at 510 (original emphasis).             It concluded:

                                        15
        BGE cannot compel [the insurer] to provide it with a
        defense based on claims which, although at one time
        asserted   by  the   [plaintiffs   in   the   underlying
        lawsuit], were no longer asserted, because such claims
        ‘will not be generated at trial.’     The fact that the
        plaintiffs never formally amended their complaint to
        restate the allegations so as to reflect their revised
        theory of BGE’s liability is of no moment.

Id.   at    511.      But    crucial     to     the   court’s   holding      was    that

discovery     showed       that    the   general      contractor   –   and    not    its

subcontractor – had the duty to fill the excavation pit into

which the plaintiffs’ car fell.                  While it was undisputed that

the subcontractor had been engaged to dig the pit, the evidence

also showed that BGE was responsible for filling the pit.                            688

A.2d at 507-09.            The plaintiffs chose to pursue their claims

only against BGE for its negligent failure to fulfill its duty,

leading the Baltimore Gas court to conclude that the insurer no

longer had a duty to defend.

      By contrast, there is not such a clean delineation of which

actor      owes    which    duty    in   this     case,    in   part   because       the

underlying complaint fails to even mention Marquez.                           But the

underlying complaint in this case does not affirmatively present

a claim that falls outside the scope of the Policy. *                     Rather, it


      *
       It is for this reason that the Underwriters’ and the
district court’s reliance on G.E. Tignall & Co., Inc. v.
Reliance Nat’l Ins. Co., 102 F. Supp. 2d 300 (D. Md. 2000) is
misplaced. As an initial matter, to the extent that the Tignall
decision suggests that there is no potentiality of coverage
merely because the underlying lawsuit does not mention the named
(Continued)
                                           16
clearly seeks recovery for property damage that was “caused in

whole or in part” by the failure to use the appropriate standard

of care in performing the renovations.            Although Marquez is not

mentioned   as   performing   the    renovation    work   that   led   to    the

collapse of the wall, Capital City, as the additional insured,

is   entitled    to   introduce     Marquez’s     involvement    by    way   of

extrinsic   evidence.      Litz,     695   A.2d   at   570.      Indeed,     the

Maryland Court of Appeals has stated that




insured, 102 F. Supp. 2d at 307, it incorrectly interprets
Maryland law.   See, e.g., Cochran, 651 A.2d at 866; Litz, 695
A.2d at 570.    Indeed, the Tignall court explicitly recognized
that “[e]xtrinsic evidence may be used by the insured to
establish the potentiality of coverage.” Tignall, 102 F. Supp.
2d at 307.   Second, we note that in holding that an underlying
tort plaintiff must plead a case of vicarious liability, id.,
the Tignall court was interpreting the predecessor to the CG 20
10 07 04 Form at issue in this case.      As we held above, the
plain language of the Endorsement presented here does not
contemplate a restriction of coverage to claims of vicarious
liability.   Finally, we note that the underlying complaint in
Tignall, unlike the underlying complaint in this case, stated
that the plaintiff “avers that all of these damages were and are
due solely to the wrongful and negligent acts and omissions of
the Defendants.” Tignall, 102 F. Supp. 2d at 307. It is worth
noting that the allegations here are not framed to affirmatively
exclude the negligent acts or omissions of parties other than
the named defendants.     Even so, such allegations would not
necessarily resolve the question of potentiality of coverage
because, again, Maryland has refused to foreclose an insured
“from receiving the defense to which [it] is entitled merely
because the complaint fails to plead allegations that establish
a potentiality of coverage under the insurance policy.”
Cochran, 651 A.2d at 866; see also Litz, 695 A.2d at 570
(permitting an insured to introduce extrinsic evidence where a
complaint  lacks   allegations  to  establish   potentiality  of
coverage).


                                      17
       [t]here is an important difference between the duty to
       defend a lawsuit that affirmatively makes a claim that
       falls outside of the coverage of the policy, and the
       duty to defend a lawsuit that fails to allege the
       elements of a cause of action that if properly alleged
       and proven would be within the coverage of policy.

Sheets, 679 A.2d at 544-45.                And as noted above, Maryland law

rejects the notion that an insured would be “foreclosed from

receiving the defense to which [it] is entitled merely because

the    complaint    fails    to    plead        allegations      that     establish    a

potentiality       of    coverage     under        the        insurance     polic[y].”

Cochran, 651 A.2d at 866.

       The Underwriters contend that Standard Fire seeks in the

underlying complaint to recover damages only on the theory that

Capital City failed to submit appropriate construction plans to

the District of Columbia.             If the Underwriters were correct,

perhaps this would be a different case.                  However, the underlying

complaint faults the named defendants for improperly excavating

and supporting 57 Bryant Street and for failing “to comply with

the    applicable       standard      of        care   while         performing     said

renovations.”       J.A. 81 (emphasis added).                 It is absurd to think

that    such   allegations         rest     solely       on    the     submission     of

construction plans rather than additionally seeking damages for

negligence     in       actually     conducting          the     construction       and

renovation work.         And again, it is undisputed that Marquez did

the foundation work during the course of the renovations.                             We


                                           18
therefore find that there is a potentiality of coverage.                         The

Underwriters     have    a     duty   to     defend   Capital     City      in   the

underlying tort lawsuit.



                                       IV.

       Capital City argues that the district court should have

made clear that, if the Underwriters owe it a duty to defend,

then Capital City is entitled to recover expenses, including

attorney’s fees.        The district court did not address this issue

below, and the Underwriters did not respond to Capital City’s

expenses and fees arguments here.               We decline to address the

question on appeal, and instead will give the district court the

opportunity to resolve the issue in the first instance.



                                       V.

       For the foregoing reasons, we conclude that the scope of

coverage under the Endorsement extends beyond acts or omissions

of Marquez for which Capital City was vicariously liable.                        The

plain   language   of    the    Endorsement     creates   a     duty   to    defend

Capital City where Capital City is being held liable for the

acts    or   omissions   of    Marquez.       Moreover,   we    find     that    the

allegations in the underlying complaint create a potentiality of

coverage.      Accordingly, we vacate the district court’s order

granting summary judgment to the Underwriters and remand this

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case for entry of summary judgment in favor of Capital City and

a determination of whether Capital City is entitled to expenses

and attorney’s fees.

                          VACATED AND REMANDED WITH INSTRUCTIONS




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