UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

CLEAR BLUE SPECIALTY INSURANCE COMPANY,

Plaintiff, v. Civil Action No. 24-1216 (JEB)

MICHAEL ROWE, et al.,

Defendants.

MEMORANDUM OPINION

In a separate and ongoing lawsuit before this Court, Michael Rowe has alleged that he

was assaulted by several security guards employed by PChange, a company that provides private

security services. See Rowe v. PChange, LLC, No. 22‑3098. Clear Blue, PChange’s insurer,

subsequently filed this suit for declaratory judgment, seeking to end its duty to defend and

indemnify PChange in that case. Clear Blue alleges that it has already disbursed $50,000 in

defense costs and thus satisfied its obligations under the policy, which includes a $50,000

sublimit for claims arising out of assault and battery. Rowe, a Defendant in this case, now asks

the Court for leave to amend his Answer to add an affirmative defense that the sublimit is

unenforceable as contrary to public policy. As that position is incorrect, however, the Court will

deny Rowe’s request to amend as futile.

I. Background

Clear Blue issued a general-liability policy to PChange on January 26, 2021, providing

coverage from January 20, 2021, to January 20, 2022. See ECF No. 1-1 (Policy) at 2. The Policy included a general aggregate limit of $2,000,000 and a per-occurrence limit of

$1,000,000. See id. It also contained dozens of exclusions, amendments, and coverage

limitations, see id. at 5–6 –– among them, a coverage limitation as to claims based on any

alleged assault and battery. See id. at 58. This assault-and-battery limitation set an aggregate

sublimit of $100,000 and a per-occurrence sublimit of $50,000 on such claims. See id.; see also

ECF No. 1 (Compl.), ¶ 73 (“[T]he Underlying Lawsuit arises out of a single occurrence of

‘assault’ and ‘battery’; therefore the Policy’s Assault and Battery Aggregate Limit does not

apply here, and all claims in the Underlying Lawsuit are subject to the Policy’s $50,000 Assault

and Battery Limit.”) (citation omitted).

In the underlying litigation, Rowe alleges that, on October 26, 2021, he was assaulted by

special police officers employed by PChange at his mother’s apartment complex in Southeast

Washington. Rowe v. PChange, LLC,

, at *1–2 (D.D.C. Apr. 17, 2024). He

filed that lawsuit in October 2022, and his multiple claims for damages remain intact. See id. at

*1. Clear Blue alleges that, in the course of that litigation, it has paid at least $50,000 for

PChange’s defense costs. See Compl., ¶ 74. Since that amount exhausted the sublimit, Clear

Blue filed a Complaint for Declaratory Judgment on April 24, 2024. See Compl. at 28. In

Rowe’s Answer, he raised two affirmative defenses. See id. at ECF No. 30 (Answer) at 20.

First, he asserted that the Court lacks jurisdiction, apparently alleging that Clear Blue lacks

standing, id. (“[T]here is no actual controversy between Clear Blue and Rowe . . . .”), and that

“[t]he case is not ripe.” Id. Second, he contended that Clear Blue had failed to state a claim

upon which relief could be granted. Id. Five weeks later, he filed this Motion, seeking to add a

third affirmative defense –– that the assault-and-battery sublimit is unenforceable as contrary to

public policy. See ECF No. 43 (Mot.).

2 II. Legal Standard

Pursuant to Rule 15(a)(2) of the Federal Rules of Civil Procedure, this Court “should

freely give leave [to amend a pleading] when justice so requires.” Such leave generally should

be granted “[i]n the absence of . . . undue delay, bad faith or dilatory motive on the part of the

movant, repeated failure to cure deficiencies by amendments previously allowed, undue

prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of

amendment.” Foman v. Davis,

(1962). Amendment should not be permitted,

however, if it would be futile. See In re Interbank Funding Corp. Sec. Litig.,

(D.C. Cir. 2010) (citing Foman,

, for proposition that “‘futility of amendment’ is

permissible justification for denying Rule 15(a) motion”); Fleck v. Cablevision VII, Inc.,

, 192–93 (D.D.C. 1992) (denying motion to amend answer “because the amendment

would prove futile”). When the defendant seeks to add affirmative defenses that are “meritless

as a matter of law, there is no need for the Court to consider whether [the defendant] has pled

sufficient facts to substantiate them.” United States v. All Assets Held at Bank Julius,

(D.D.C. 2017).

III. Analysis

In seeking to amend, Rowe maintains that the $50,000 sublimit is contrary to public

policy. See Mot. at 3–4. “A promise or other term of an agreement is unenforceable on grounds

of public policy if the interest in its enforcement is clearly outweighed in the circumstances by a

public policy against the enforcement of such terms.” Samuels v. S. Hills Ltd. P’ship,

(D.D.C. 2017) (cleaned up) (citing Restatement (Second) of Contracts § 178

(Am. L. Inst. 1981)). Rowe contends that the sublimit, if enforced, would undermine D.C.

Municipal Regulations on private security agencies, see Mot. at 3–4, which the District requires

3 to be licensed. See

; Perez v. C.R. Calderon Constr., Inc.,

(D.D.C. 2016) (“[C]ontracts made in violation of a licensing statute

designed to protect the public will usually be considered void and unenforceable.”) (internal

quotation marks and citation omitted). Among other prerequisites to licensure, “[a] security

agency that employs five (5) or more individuals as security officers shall maintain general

liability insurance in an amount not less than $250,000 per occurrence and $600,000 in the

aggregate.”

.

The parties first disagree as to whether the insurance requirement even applies to

PChange. Clear Blue notes that Section 2127.6 governs only security agencies that employ five

or more individuals “as security officers,” and PChange’s special police officers are expressly

excluded from the regulatory definition of “security officer.” See ECF No. 44 (Opp.) at 3–4

(citing

). Rowe counters that he should again be granted leave

to amend, either because PChange’s SPOs do count for the general-liability provision or, at least,

because he is “entitled to discovery” to prove that PChange employs at least five non-SPOs who

qualify as “security officers.” ECF No. 45 (Reply) at 4–5. The Court need not wade into these

murky waters to resolve the Motion, however, because it will assume that Section 2127.6 does

apply to PChange.

Even granting that assumption, Clear Blue asserts that the Policy nonetheless complies

because it provides $1,000,000 per-occurrence and $2,000,000 aggregate limits, “far

exceed[ing]” the statutory minima of $250,000 and $600,000. See Opp. at 5; see also Policy at

2. Rowe protests that the $50,000 sublimit “was designed to evade, or has the actual effect of

evading, the DCMR requirements and the public policy objectives of those requirements.” Mot.

at 4. The Court will assess only the validity of this sublimit because, in Rowe’s own words, he

4 “does not argue that the whole Policy violates the DCMR requirement, but simply that the

Assault and Battery sublimit does.” Reply at 7.

Clear Blue has the stronger position here. To start, the chapter regulating security

agencies is silent as to sublimits. See D.C. Mun. Regs. tit. 17, ch. 21. Rowe nonetheless asserts

that the sublimit “evade[s]” the “public policy objectives” behind the general-liability coverage

mandate. See Mot. at 4. To invalidate the sublimit on this basis, the Court would need to find

that “the interest in [the sublimit’s] enforcement is clearly outweighed in the circumstances by a

public policy against the enforcement of such terms.” Samuels,

(emphasis

added) (quoting Jacobsen v. Oliver,

(D.D.C. 2008)). The legislature’s

intent to prohibit insurance sublimits in the private-security context, however, is far from

obvious. Despite Rowe’s diligent analysis of legislative history, see Reply at 7–8, and inclusion

of a 41‑page committee report of the D.C. Council, see ECF No. 45-1 (Committee Rpt.), the

Court can discern no such purpose. The Committee apparently never considered sublimits and

only occasionally alluded to the appropriateness of a general-liability insurance mandate ––

though even that discussion was terse. See, e.g., Committee Rpt. at 2–6, 19. Without

mentioning sublimits, it simply concluded that Section 2127.6 “require[d] a security agency that

employs five or more individuals as security officers to maintain general liability insurance.”

See id. at 6. In other words, the regulation prescribes only what Clear Blue says it does. See

Opp. at 5–6. Rowe’s amendment is therefore futile because, despite careful examination, the

Court can discern no public policy interest that “clearly outweigh[s]” the interest in enforcing

the sublimit. Samuels,

(quoting Jacobsen, 555 F. Supp. 3d at 79).

Rowe’s case citations do not alter this outcome. See Reply at 6–7. In Smalls v. State

Farm Mutual Automobile Insurance Co.,

(D.C. 1996), for example, the D.C. Court

5 of Appeals held that an auto-insurance exclusion for the insured’s family was invalid insofar as it

allowed insurers to provide less coverage than the amount required by the No-Fault Motor

Vehicle Insurance Act. The transparent difference between Smalls and this case, however, is

that the No-Fault Act explicitly proscribed coverage carve-outs. See

at 36 (quoting D.C.

Code § 35‑2106(c)’s requirement that “any liability of an insured . . . shall be paid by the insurer

up to the amount established by the policy”). Smalls thus held a coverage exclusion

unenforceable because it clearly contravened the text of a statute, which Rowe does not –– and

cannot –– argue here.

He further fails to persuasively rebut Clear Blue’s assertion that “[n]o case in the country

has held an assault and battery sublimit in an insurance contract violates public policy.” Opp. at

6. Rowe gives the Court no reason to be the first to so hold.

IV. Conclusion

For the foregoing reasons, the Court will deny Rowe’s Motion for Leave to Amend

without prejudice. A contemporaneous Order so stating will issue this day.

/s/ James E. Boasberg JAMES E. BOASBERG United States District Judge Date: November 20, 2024

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