United States District Court, D. Maryland
William M. Nickerson Senior United States District Judge.
Before the Court are the following motions: (1) a motion filed by the Walter E. Campbell Company, Inc. (WECCO) and The Hartford Financial Services Group, Inc. (Hartford) to dismiss the claims that they have asserted against each other and to substitute WECCO for Hartford in the remaining claims in this litigation (Motion to Dismiss), ECF No. 283; (2) a motion filed by The Continental Insurance Company, United States Fire Insurance Company and St. Paul Fire and Marine Insurance Company (collectively, the Non-Settled Insurers) to enforce previous Orders of this Court and for a declaration of the parties’ obligations thereunder (Motion to Enforce), ECF No. 284; and (3) a motion filed by the Non-Settled Insurers for partial summary judgment in the form of declarations related to the proper application of pro rata allocation to claims against WECCO in certain asbestos suits (Motion for Partial Summary Judgment), ECF No. 299. The motions are all ripe. Upon review of the papers filed and the applicable case law, the Court determines that no hearing is necessary, Local Rule 105.6, and that Non-Settled Insurers’ Motion to Enforce will be denied, that Non-Settled Insurers’ Motion for Partial Summary Judgment will be granted, and that the Motion to Dismiss filed by WECCO and Hartford will be granted, as modified.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case 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. The factual background of the dispute and the somewhat convoluted procedural history of this action have been set out in detail in previous opinions of this Court and will not be repeated here. The Court has, however, issued several rulings in this action that are relevant to the instant motions. First, the Court has issued a ruling on Maryland insurance law as it relates to the policies at issue. On May 26, 2015, the Court declared the following:
(a) Maryland law governs the interpretation of the insurance policies issued or allegedly issued to WECCO by [its] Insurers;
(b) Bodily injury that occurs during an insurer’s policy period, and that arises from an operation that concluded prior to the inception of the policy period, falls within the “completed operations” hazard of that policy and therefore is subject to the aggregate limits of each such policy; and
(c) To avoid the application of the aggregate limit of any particular policy, WECCO bears the burden of proving that the bodily injury that occurred during that policy’s policy period arose from asbestos exposure during a WECCO operation that was ongoing during such policy period.
May 26, 2015 Order, ECF No. 252. Second, having been informed that WECCO has settled the claims between it and various insurers (collectively, the Settled Insurers), the Court issued orders setting out the ongoing obligations of the parties relative to the underlying asbestos litigation. See ECF No. 199 (dismissing claims between WECCO and Pennsylvania Manufacturers Association Insurance Company and claims between WECCO and Federal Insurance Company); ECF No. 252 (dismissing claims between WECCO and General Insurance Company of America). In the Orders dismissing those claims and substituting WECCO for the Settled Insurers, the Court specified that:
(i) Any judgment or award obtained by WECCO against any other insurer shall be automatically reduced by the amount, if any, that a Court determines by judgment [the Settled Insurer] would have been liable to pay such other insurer as a result of that insurer’s claim so that the claim by that insurer against [the Settled Insurer] is thereby satisfied and extinguished;
(ii) WECCO will be obligated to participate in the defense and indemnity of WECCO to the same extent that [the Settled Insurer] would be obligated to participate under applicable law; and
(iii) WECCO and [the Settled Insurer] are ORDERED to deposit the settlement payment in a qualified settlement fund, pending resolution of substantive issues relating to [the Settled Insurer’s] responsibility, if any, to pay defense and indemnity costs;
ECF No. 199 at 10-12, ECF No. 252 at 3.
II. NON-SETTLED INSURERS’ MOTION TO ENFORCE
There is substantial disagreement among the parties as to whether WECCO has complied with these Orders since their issuance. In their Motion to Enforce, Non-Settled Insurers represent that WECCO has failed to make promised payments of fees to long-standing defense and settlement counsel, Richard Flax and Robert Spinelli. WECCO then unilaterally replaced Flax and Spinelli with the law firm of Morgan Lewis & Bockius LLP (Morgan Lewis) in over 570 pending asbestos suits against WECCO. Morgan Lewis is the firm that is also representing WECCO in the instant coverage dispute and Non-Settled Insurers view the representation in the underlying asbestos cases by coverage counsel as a clear conflict of interest. Instead of Morgan Lewis, the Non-Settled Insurers advocate for the retention of Dehay & Elliston, a law firm with considerable experience ...