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General Insurance Company of America v. The Walter E. Campbell Co. Inc.

United States District Court, D. Maryland

March 10, 2017

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

          MEMORANDUM

          William M. Nickerson Senior United States District Judge.

         Before the Court are the following dispositive motions: Motion for Partial Summary Judgment, Reconsideration, and Modification filed by the Walter E. Campbell Company, Inc. (WECCO), ECF No. 337; Motion for Final Summary Judgment filed by Property and Casualty Insurance Guaranty Corporation (PCIGC), ECF No. 339; Motion for Summary Judgment filed by United States Fire Insurance Company (U.S. Fire), ECF No 342; Motion for Partial Summary Judgment filed by Continental Insurance Company (Continental), ECF No. 345; and Motion for Summary Judgment Regarding Exhaustion and Defense Costs filed by St. Paul Fire and Marine Insurance Company (St. Paul), ECF No. 352. In addition, there are two pending Motions to Strike: one by St. Paul, ECF No. 351; and one by U.S. Fire, ECF No. 380.[1] Upon review of the filings and the applicable law, the Court determines that no hearing is necessary, Local Rule 105.6, and that WECCO's motion for partial summary judgment will be denied and the remaining motions for summary judgment will be granted. St. Paul's motion to strike will be granted in part and denied as moot in part, and U.S. Fire's motion to strike will be denied as moot.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         This action involves an insurance coverage dispute between WECCO and several of its insurers. WECCO is a company which, for decades, engaged in the business of handling, installing, disturbing, removing, and selling asbestos-containing insulation materials. As a result, WECCO has been named in hundreds of personal-injury asbestos lawsuits and its insurers have paid out millions of dollars in claims. The insurers involved in this suit assert that the policies that they issued provided coverage for periods of time after WECCO ceased selling or installing those asbestos-containing products. On that basis, they contend that claims under their policies are “completed operations” hazard claims which are subject to aggregate limits of liability that have now been exhausted.

         This action has a long and drawn-out procedural history in which the Court has been called upon to make numerous rulings. See ECF Nos. 131, 146, 199, 251, 267, 282, 312, and 329. Several of those earlier rulings came in response to WECCO's efforts to avoid, at all costs, binding precedent in the Fourth Circuit that resolved the major coverage issues in this action in a manner that is counter to WECCO's desired resolution of those issues. At one point, WECCO contended 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, despite the fact that it was clear that Maryland law would govern WECCO's claims. That contention, however, led to the filing of a parallel action in the Superior Court for the District of Columbia on January 14, 2013, an action that was subsequently stayed in favor of this action.

         After discovery confirmed that there was no support, whatsoever, for the contention that WECCO's claims were not indeed governed by Maryland law, WECCO sought to have the issues submitted as certified questions to the Maryland Court of Appeals, despite the fact that this Court had previously held that it would be an abuse of discretion to certify these same well-settled issues to that court. See Nat'l Union Fire Ins. Co. of Pittsburgh, Pa v. Porter Hayden Co., 331 B.R. 652, 658 n.8 (D. Md. 2005). Notwithstanding its reluctant acknowledgment that Maryland law governs this action, WECCO has twice suggested that that a D.C. court could better resolve these issues than this Court, ignoring the clear teaching of the Fourth Circuit that “a particular state's interests are ‘better served by having the coverage issues decided by a federal court sitting in [that state], rather than in a state court sitting in [a different state].'” Great Am. Ins. Co. v. Gross, 468 F.3d 199, 209 (4th Cir. 2006)).

         The motivation behind WECCO's persistent efforts to avoid Fourth Circuit precedent is made abundantly clear in the pending summary judgment motions. The binding Fourth Circuit precedent, when applied to the undisputed facts in this action, results in the defeat of WECCO's claims. WECCO's somewhat spurious and often poorly supported arguments in the pending motions serve to highlight the fundamental lack of merit of those claims.

         Having determined that the coverage issues in this action will be resolved by this Court applying Fourth Circuit precedent, this Court has in some of its more recent rulings issued several declarations on those coverage issues, declarations which are relevant to the pending dispositive motions. In a May 26, 2015, Memorandum and Order, the Court issued the following declarations:

(a) Maryland law governs the interpretation of the insurance policies issued or allegedly issued to WECCO by Certain Insurers;[2]
(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.

         ECF No. 252 at 2.

         As noted above, during the course of this litigation, several of the insurers have settled their claims with WECCO. Regarding the ongoing post-settlement obligations of the parties relative to the underlying asbestos litigation, this Court made the following declarations in a May 12, 2016, Memorandum and Order:

(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 [(the WECCO QSF)], pending resolution of substantive issues relating to [the Settled Insurer's] responsibility, if any, to pay defense and indemnity costs;

         ECF No. 312 at 4 (quoting ECF No. 199 at 10-12 and ECF No. 252 at 3).

         In that same Memorandum and Order, the Court addressed how liability in the underlying asbestos litigation should be allocated amongst the various insurers and WECCO. The Court declared:

(a) Any indemnity obligation an insurer may have to WECCO with respect to an asbestos bodily injury suit is to be allocated pro rata based on such insurer's triggered time on the risk as compared to the “Allocation Period, ” which is the entire period during which the claimant's bodily injury occurred. The Allocation Period starts with the date of a claimant's first WECCO-related exposure to asbestos and ends with the manifestation of the claimant's asbestos-related disease, exclusive of any periods for which WECCO establishes that insurance for asbestos claims was commercially unavailable to WECCO for procurement.
(b) WECCO must pay all pro rata shares of any judgment or settlement not allocable to Certain Insurers. This includes indemnity allocable to any period in the Allocation Period for which (i) the insurance procured by WECCO has been exhausted; (ii) the insurance procured by WECCO was issued by one or more insurers that are insolvent; (iii) the insurance procured by WECCO was issued by an insurer with whom WECCO has reached a settlement; and/or (iv) WECCO failed to procure insurance, unless WECCO establishes that insurance for asbestos claims was commercially unavailable to WECCO for procurement during that period.

ECF No. 313 ¶ 3.

         Some of this Court's most recent rulings have addressed discovery issues. On November 5, 2015, the Court issued an order setting a timetable for discovery related to the exhaustion of aggregate limits and the filing of dispositive motions on those issues. ECF No. 282. On June 1, 2016, the Court issued a ruling granting St. Paul's motion to compel and ordering WECCO to supplement multiple discovery responses related to critical issues that the Court found to be seriously inadequate. ECF No. 329. In that ruling, the Court also noted, at least as to WECCO's claims against St. Paul, that “[g]iven that WECCO was a participant in its own defense and received contemporaneous communications concerning the insurers' indemnity payments throughout the period in question and that St. Paul produced its payment records to WECCO more than a year and a half ago, . . . WECCO has had more than adequate opportunity to articulate the factual basis for its contention that St. Paul has not exhausted the aggregate limits of its policies.” Id. at 3.

         With discovery as to the exhaustion of aggregate limits now complete, WECCO, St. Paul, U.S. Fire, and Continental have filed motions for summary judgment on that issue. In addition, as explained below, PCIGC has filed a motion for summary judgment contending that WECCO has no evidence to establish that PCIGC is liable for claims arising out of an insurance policy issued by a now insolvent insurer, Centennial Insurance Company (Centennial).

         II. LEGAL STANDARD

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing the motion, then a genuine dispute of material fact is presented and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, the “mere existence of a scintilla of evidence in support of the [opposing party's] position” is insufficient to defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to be drawn from the underlying facts, must be viewed in the light most favorable to the opposing party, Scott v. Harris, 550 U.S. 372, 378 (2007), who may not rest upon the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial. Fed.R.Civ.P. 56(c)(1). Supporting and opposing affidavits are to be made on personal knowledge, contain such facts as would be admissible in evidence, and show affirmatively the competence of the affiant to testify to the matters stated in the affidavit. Fed.R.Civ.P. 56(c)(4).

         III. DISCUSSION

         The pending dispositive motions all relate to WECCO's Amended Third Party Complaint and Cross Claims. ECF No. 268. Count I, which was brought against St. Paul, U.S. Fire, Continental, and PCIGC, is for a declaratory judgment to resolve the controversies as to whether the insurers have properly allocated claims that they paid to the aggregate limits of their policies and whether PCIGC is liable under policies issued by certain now insolvent insurers.[3] In Count II, brought against St. Paul, U.S. Fire, and Continental, WECCO asserts that those insurers breached their insurance contracts by failing to pay for or reimburse WECCO for the defense costs associated with the underlying asbestos suits. In Count III, brought against St. Paul and U.S. Fire, WECCO asserts that those insurers breached their insurance contracts by improperly allocating settled operations claims as settled completed operations claims and thus prematurely exhausting the aggregate limits of their policies.

         A. St. Paul Policies

         Two of the pending dispositive motions relate to policies issued by St. Paul. The first, WECCO's motion for partial summary judgment, reconsideration, and modification, challenges determinations made in this Court's May 26, 2015, Memorandum and Order. In this motion, which was filed on July 1, 2016, WECCO argues, for the first time in this litigation, that the policy language in the St. Paul primary policies is “materially different” from the language that the Court interpreted in its May 26, 2015, Memorandum. ECF No. 338 at 2. Notably, WECCO does not seek reconsideration of the Memorandum and Order with respect to any of the policies issued by the other insurers, nor does it challenge the Court's determination that In re Wallace & Gale Co., 385 F.3d 820 (4th Cir. 2004), and National Union Fire Ins. Co. of Pittsburgh, Pa. v. Porter Hayden Co., 331 B.R. 652 (D. Md. 2005) apply to the interpretation of those other policies. ECF No. 337 at 1 n.2.[4]

         In opposing this motion, St. Paul argues, inter alia, that the motion must be denied as untimely as it was filed more than a year after the issuance of the order that the motion is now challenging. As an interlocutory order, this Court's May 26, 2015, Order is subject to the provisions of Rule 54(b) of the Federal Rules of Civil Procedure which provides that such orders “may be revised any time before the entry of a judgment adjudicating all the claims.” The May 26, 2015, Order, however, is also subject to the dictates of Local Rule 105.10 which provides that “any motion to reconsider any order issued by the Court shall be filed with the Clerk not later than fourteen (14) days after entry of the order.”

         In its motion, WECCO anticipated St. Paul's timeliness argument in a footnote. ECF No. 338 at 10 n.4. While acknowledging that Local Rule 105.10 mandates that motions for reconsideration be filed within 14 days, WECCO notes that Local Rule 604 permits this Court to suspend the provisions of any of its Local Rules for “good cause shown.” Id. WECCO then notes that “[t]his court has previously held that a district court's error of law in applying the correct contract terms constitutes good cause under Local Rule 604 for allowing a motion for reconsideration more than fourteen days after entry of the order.” Id. (citing Harper v. Anchor Packing Co., Civ. No. 12-460, 2014 WL 3828387, at *1-2 (D. Md. Aug. 1, 2014)).

         In Harper, the motion for reconsideration that was granted was filed only 15 days beyond the time permitted under Local Rule 105.10. Harper was an asbestos injury case and the contract term that the Court's erred in applying was the particular type of asbestos product referenced in the defendant's invoices. Those invoices indicated that the defendant had shipped “asbestos-containing Johns-Mansfield packing” to the plaintiff's workplace, but the Court mischaracterized the invoices as indicating that the defendant shipped “asbestos-containing Johns-Mansfield pipe covering.” 2014 WL 3828387, at *2 (emphasis added). Based on that mischaracterization, the Court denied the defendant's motion for summary judgment, concluding that, when considering those invoices in conjunction with deposition testimony that the plaintiff had been exposed to Johns-Mansfield pipe covering, there was a genuine dispute of material fact as to whether exposure to Johns-Mansfield pipe covering was a substantial factor in causing the plaintiff's injuries. Civ. No. GLR-12-460, ECF No. 608 at 5. After being made aware of its misreading of the invoices through the motion to reconsider that ruling, the Court granted summary judgment for the defendant, noting that there was no evidence in the record that Johns-Mansfield packing was used at plaintiff's workplace. Significantly, the misconstrued invoices were injected into the litigation for the first time with the plaintiff's opposition to the motion for summary judgment. See Civ. No. GLR-12-460, ECF No. 582 at 3-5 (Reply in Support of Summary Judgment Motion) (complaining that the invoices were not disclosed in discovery but first submitted with the plaintiff's opposition).

         Here, WECCO's motion for reconsideration was not filed just 15 days late, but more than a year and 15 days late. Furthermore, as St. Paul notes, the meaning of the “completed operations” provisions in all of the insurers' policies has been one of the primary issues in this litigation since its inception and WECCO has filed no fewer than six briefs on this same issue. Also of significance, unlike the invoices in Harper, the St. Paul policies are not recent or last minute submissions into this litigation. WECCO was provided with the St Paul policies that it now claims contain “materially different” provisions at least as early as October of 2014, when the policies were submitted as attachments to an earlier motion filed by St. Paul for summary judgment. See, e.g., ECF No. 220-23 at 61 (GENINS008281). Thus, WECCO could have made these same arguments it now advances more than a year ago, before the Court issued its May 26, 2015, Memorandum and Order. WECCO offers no explanation, whatsoever, as to why it did not do so. Remarkably, in its reply memorandum, WECCO makes no further argument for a showing of good cause for the untimely filing of its motion.

         Under these circumstances, the Court cannot conclude that WECCO has shown good cause for waiting until now to finally read the language of the St. Paul policies and argue that the language in those policies has a different meaning than the language analyzed in Wallace & Gale, in Porter Hayden, and by this Court in its previous memorandum. See, Coulibaly v. J.P. Morgan Chase Bank, N.A., Civ. No. 10-3517, 2011 WL 6837656, at *2 (D. Md. Dec. 28, 2011) (denying the plaintiffs' untimely Rule 54(b) motion for lack of good cause shown where the “motion could not prevail because they seek either to relitigate the same issues addressed by the opinion deciding the motions to dismiss or to introduce new arguments that they failed to raise previously. These are not appropriate grounds for reconsideration.”).

         Even if timely filed, the motion would be denied. In denying a timely motion to reconsider, this Court has concluded that, “[a]lthough there is a policy in the Fourth Circuit in favor of claims being resolved on their merits, see Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002), it does not follow that the failure to reach the merits necessarily constitutes a manifest injustice, as Plaintiff appears to suggest. This is particularly true where, as here, Plaintiff advances an argument in her motion for reconsideration that could have been raised in her prior motion, but was not.” Reyazuddin v. Montgomery Co., Md., Civ. No. 11-0951, 2012 WL 642838, at *3 (D. Md. Feb. 27, 2012). See also, MBR Constr. Servs., Inc. v. Liberty Mut. Ins. Co., Civ. No. 15-14, 2016 WL 3190650, at *1 (“[A] motion to reconsider is not proper where it only asks the Court to rethink its prior decision, or presents a better or more compelling argument that the party could have presented in the original briefs on the matter.”) (emphasis added, citation omitted).

         The Court will deny as untimely WECCO's motion for reconsideration and modification of this Court's May 26, 2015, Order.[5] Because WECCO's request for the entry of partial summary judgment in its favor is premised on its alternative interpretation of the St. Paul policies, that request will also be denied.

         The second motion related to the St. Paul policies is St. Paul's motion for summary judgment regarding exhaustion and defense costs. In that motion, St. Paul asks the Court to resolve four dispositive questions. First, St. Paul seeks a declaration that its indemnity payments for eight specific asbestos bodily injury claims[6] were properly classified as completed operations claims subject to the aggregate limit in its policies. Second, St. Paul seeks a declaration that the aggregate limits of its policies have been exhausted. Third, St. Paul asks the Court to find that WECCO's breach of contract and declaratory judgment claims, as to its primary policies, are barred by the applicable three year statute of ...


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