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General Insurance Co. v. Walter E. Campbell Company, Inc.

United States District Court, D. Maryland

May 26, 2015

GENERAL INSURANCE COMPANY OF AMERICA
v.
THE WALTER E. CAMPBELL COMPANY, INC. et al.

MEMORANDUM

WILLIAM M. NICKERSON, Senior District Judge.

Before the Court are the following motions: a Motion to Certify Questions of Law to the Court of Appeals of Maryland filed by the Walter E. Campbell Company, Inc. (WECCO), ECF No. 219; a Motion for Partial Summary Judgment, filed by United States Fire Insurance Company (U.S. Fire), The Hartford Financial Services Group, Inc. (The Hartford), [1] St. Paul Fire and Marine Insurance Company (St. Paul), Continental Insurance Company (Continental), National Indemnity Company (National Indemnity), and Plaintiff General Insurance Company of America (General Insurance) (collectively, Certain Insurers), ECF No. 220; WECCO's motion to strike the evidence offered in support of Certain Insurers' summary judgment motion, ECF No. 223; a Motion for Voluntary Dismissal filed by General Insurance and WECCO, ECF No. 237; and a Motion for Partial Summary Judgment filed by Property & Casualty Insurance Guaranty Corporation (PCIGC), ECF No. 239.[2] The motions are all ripe. Upon review of the filings and the applicable law, the Court determines that no hearing is necessary, Local Rule 105.6, and that: (1) WECCO's motion to certify questions of law will be denied; (2) Certain Insurer's motion for partial summary judgment will be granted; (3) WECCO's motion to strike will be denied; (4) the motion for voluntary dismissal will be granted; and (5) PCIGC's motion for partial summary judgment will be granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action involves an insurance coverage dispute between WECCO - a company which for decades engaged in the business of handling, installing, disturbing, removing, and selling asbestos-containing insulation materials - and several of its insurers. Certain Insurers issued policies for WECCO between November 19, 1972, and April 1, 1983, a time period which Certain Insurers assert was after WECCO ceased selling or installing asbestos-containing products. This action already has a long procedural history and one that has been entangled with a parallel action that is currently resting in the Superior Court of the District of Columbia. The Walter E. Campbell Co. v. Gen. Ins. Co. of Am., Civ. No. 13-109 (D.C.) (the D.C. Action). A brief review of the procedural history relevant to the pending motions follows. A more detailed account of the procedural history of this action and the D.C. Action was provided in this Court's previous opinions dated June 11, 2013, and January 16, 2014. ECF Nos. 131 and 146.

This action was filed in this Court by General Insurance, one of WECCO's insurers, on November 9, 2012. Two months later, on January 7, 2013, WECCO filed the parallel action in the Superior Court of the District of Columbia raising essentially the same issues as raised here. The D.C. Action was subsequently removed to the United States District Court for the District of Columbia, remanded back to the Superior Court, removed again, and remanded again. On September 12, 2014, the Superior Court granted Certain Insurers' motion to stay that action in light of the pendency of this action.

As the D.C. Action bounced back and forth, WECCO has made repeated efforts to prevent the resolution of the dispute between the parties from taking place in this Court. WECCO moved to realign the parties so that this case could be dismissed for lack of jurisdiction, ECF No. 40; asked this Court to abstain from the exercise of its jurisdiction, ECF No. 104; and, in the pending motion to certify questions of law, ECF No. 219, asked this Court to have the Maryland Court of Appeals, instead of this Court, decide the central issues in this dispute. In its supplement to the motion to certify, ECF No. 238, WECCO again prays, as an alternative remedy to certification of questions of law to the Maryland Court of Appeals, that this Court stay this action in deference to the D.C. Action.

The motivation behind WECCO's persistence is quite clear and has been the subject of commentary by both this Court and the Superior Court for the District of Columbia. As explained below, there is binding precedent in the Fourth Circuit on the two critical issues in this dispute - precedent that is unfavorable to WECCO's position on both issues - and, by seeking another forum, WECCO hopes to avoid the application of that precedent. In all fairness, both courts have also recognized that General Insurance engaged in its own forum shopping, electing to file its action in this Court to take advantage of that favorable Fourth Circuit precedent, as opposed to filing in a Maryland state court where that precedent would not be binding.

At one point in this action, WECCO also expressed some uncertainty, real or feigned, as to whether Maryland law should apply to this dispute. In support of its earlier maneuvers to have this dispute resolved in the District of Columbia courts, WECCO suggested that "the law of the District of Columbia applies to some or all of the issues in this dispute." ECF No. 104-1 at 15. In response to a previous motion for partial summary judgment filed by Certain Insurers, ECF No. 200, WECCO opposed the motion in part on the ground that Certain Insurers had submitted insufficient evidence to support the conclusion that Maryland law applied to the policies at issue. ECF No. 211 at 11-12. On June 11, 2014, this Court denied the previous motion for partial summary judgment as premature and permitted three months of limited discovery concerning choice of law issues. ECF No. 213. That discovery appears to have confirmed what was suspected all along - that Maryland law applies to this dispute - as WECCO makes no further mention of any unsettled choice of law issues in its motion to certify questions of law to the Maryland Court of Appeals.

In opposing Certain Insurers' previous motion for partial summary judgment, WECCO also challenged the completeness of insurance policies submitted with the motion. Accordingly, in its Order of June 11, 2014, the Court also permitted discovery on that issue during the three month discovery period. WECCO has renewed its purported concerns about the completeness of the policies in opposing the current summary judgment motions. The completeness of the policies is also one of the primary issues raised in WECCO's motion to strike the materials submitted in support of Certain Insurers' renewed motion for partial summary judgment.

Certain Insurers' renewed motion for partial summary judgment is substantially the same as the previous motion that was denied as premature. In this motion, Certain Insurers seek general declarations concerning the law that governs the interpretation of the policies at issue, the scope of the "completed operations hazard" provisions contained in the policies, and the resolution of which party bears the burden of proving that a claim falls in or out of the scope of those provisions. In addition, Certain Insurers seek a declaration that the completed operations hazard provisions in their policies apply to the claims raised in two specific suits: Emiline T. Good, P.R. of the Estate of Paul Good (dec.) v. The Walter E. Campbell Company, Inc., et al, No. 24X11000424 (Baltimore City Cir. Ct.) (the Good claim) and Evelyn Cunningham, Surviving Spouse and Personal Representative of the Estate of Joseph A. Cunningham (dec.), et al. v. The Walter E. Campbell Company, Inc., et al., No. 24X12000283 (Baltimore City Cir. Ct.) (the Cunningham claim). The claims against WECCO in these actions were settled in 2014.

Third Party Defendant PCIGC has also filed a motion for partial summary judgment. ECF No. 239. PCIGC is a creature of the Maryland General Assembly and is assigned limited liability in the event of the insolvency of certain types of insurers. In its motion, PCIGC is seeking a declaration regarding the scope of covered claims for which it has potential liability due to the insolvency of two particular insurance companies, Centennial Insurance Company and American Mutual Insurance Company.

The last significant development relative to the pending motions is that a settlement was reached between General Insurance and WECCO as to all claims between those two parties. On the basis of that settlement, WECCO and General Insurance filed a joint motion to dismiss the claims that they have asserted against each other. ECF No. 237. While the remaining Certain Insurers did not oppose that motion, they did file a response requesting that the dismissal be subject to certain conditions. ECF No. 240.

II. MOTION TO CERTIFY QUESTIONS OF LAW

There are two issues of insurance policy interpretation that are at the heart of this coverage dispute. The first relates to the manner in which coverage is allocated between multiple insurers that had policies in place during different periods of time (the Allocation Issue). WECCO advocates for an "all sums" rule, under which each insurer is independently obligated to indemnify the insured, in full, up to that insurer's policy limits. Under that rule, the insured can be indemnified up to the full limits of any triggered policy and then, at some later date, the indemnification expenses are apportioned among the solvent and available insurers that issued the triggered policies. Under the alternative "pro rata" rule, the obligation to indemnify is prorated among all insurers based upon their time on the risk. In a 2002 opinion in an asbestosrelated insurance dispute similar in all relevant aspects to this dispute, the Maryland Court of Special Appeals adopted the pro rata rule. Mayor and City Council of Baltimore v. Utica Mut. Ins. Co., 802 A.2d 1070 (Md. Ct. Spec. App. 2002). Two years later, in In Re: The Wallace & Gale Co., the Fourth Circuit held that the pro rata rule is the law of Maryland in light of the Maryland Court of Special Appeals' decision in Utica Mutual. 385 F.3d 820, 830 (4th Cir. 2004).

The second issue arises out of clauses in the Certain Insurers' policies that provide separate and distinct coverage for "completed operations hazards." In contrast to the coverage for "operations" which was subject only to "each occurrence" limits, coverage for bodily injury included within the completed operations hazards are subject to an aggregate limit. The issue then becomes, what injuries fall within the completed operations hazard? (the Completed Operations Issue).

WECCO takes the view that this aggregate limit applies only when a claimant's exposure to asbestos occurred after WECCO completed its insulation installation or removal work at a particular jobsite. Under its view, if a claimant was exposed to asbestos during WECCO's operations, the claim would remain an operations claim even if the specific actual bodily injury was not manifested until after the operations were completed. The result under this view, in practical terms most relevant here, is that claims under insurance policies that did not come into effect until after the completion of all WECCO asbestos operations would be considered operations claims and not completed operations hazard claims. Thus, those claims under the post-completion policies would not be subject to the aggregate limit in those policies.

Certain Insurers urge a different interpretation - an interpretation that has previously been adopted by this Court in an opinion written by Judge Peter Messitte:

If a claimant's initial exposure occurred while [the insured] was still conducting operations, policies in effect at that time will not be subject to any aggregate limit. If, however, initial exposure is shown to have occurred after operations were concluded or, if exposure that began during operations continued after operations were complete, then the aggregate limits of any policy that came into effect after operations were complete will apply. Where a given claimant falls within this framework will have to be considered on a case-by-case basis.

In re Wallace & Gale Co., 275 B.R. 223, 241 (D. Md. 2002) (emphasis added), vacated in part on other grounds, 284 B.R. 557 (D. Md. 2002).

It has been noted by Judge Andre Davis, then of this Court, that the above quoted discussion of "exposure" that occurs during operations or continues to occur after operations is not a clear as it could be. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Porter Hayden Co., 331 B.R. 652, 667 n.20 (D. Md. 2005) (Porter Hayden I). Judge Davis suggests that "[i]t would have been more clear to refer to injury' that occurs or continues to occur after operations were complete." Id . Judge Davis then pointed to other language in Judge Messitte's opinion confirming that it was "injury" that was meant:

"It remains true that asbestos-related injury can occur at any time from exposure onward and that it cannot be said with certainty when or to what extent it actually occurs. But whatever injury - theoretical or real - is assumed to have occurred after Wallace and Gale's operations were completed will always - by definition - be covered by the completed operations clause. The injury occurs after operations were completed. Nor does it matter whether an injury is viewed as occurring both upon initial exposure before operations are completed as well as thereafter. The portion of the injury ...

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