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Pennsylvania National Mutual Casualty Insurance Co. v. Jacob Dackman & Sons, LLC

United States District Court, D. Maryland

September 14, 2017

PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Plaintiff,
v.
JACOB DACKMAN & SONS, LLC, et al., Defendants.

          MEMORANDUM OPINION

          RICHARD D. BENNETT UNITED STATES DISTRICT JUDGE.

         This case arises out of a lead paint lawsuit filed by defendant Daniel Heggie (“Heggie”) in the Circuit Court of Maryland for Baltimore City against his former landlords, defendants Jacob Dackman & Sons, LLC and Elliot Dackman (“the Dackman parties”). Daniel Mathew Heggie, Jr. v. Jacob Dackman & Sons, LLC, , Case No. 24-C-13-006788 (Cir. Ct. Balt. City) (“the Underlying Litigation”). Following a jury trial in that case, judgment was entered against the Dackman parties in the amount of $1, 006, 469.00 (“the Underlying Judgment”).

         In this Court, plaintiff Pennsylvania National Mutual Casualty Insurance Company (“plaintiff” or “Penn National”) seeks a declaratory judgment regarding the extent of its obligation to indemnify the Dackman parties pursuant to a commercial general liability policy it issued to them on June 1, 1991, and which subsequently was renewed through August 1, 1997. (ECF No. 1.) Specifically, Penn National asserts that it is only liable for $165, 606.72 of the Underlying Judgment against the Dackman parties based on the “pro rata time-on-the-risk” principle set forth in Pennsylvania Nat. Mut. Cas. Ins. Co. v. Roberts, 668 F.3d 106 (4th Cir. 2012), a case arising out of this Court. Pennsylvania Nat. Mut. Cas. Ins. Co. v. Attsgood Realty, JFM-09-2650, 2010 WL 2998681. It is undisputed that Penn National already has paid this amount to Heggie. (ECF No. 10 at ¶ 4.) While defendant Heggie does not dispute that Roberts governs the outcome of this case, he asserts that the pro rata time-on the-risk calculation should be based on “the limited period of time that [Heggie] was being injure d by lead-based paint-and not, as Penn National alleges, the entire time he was simply being exposed to [] lead-based paint.” (ECF No. 29-1 at 3) (emphasis in original.) Thus, Heggie argues that Penn National must indemnify the Dackman parties for a total of $620, 991.37, and therefore should pay him an additional $455, 384.65 toward the total judgment entered in the Underlying Litigation.[1]

         Now pending before this Court is Penn National's Motion for Summary Judgment (“Plaintiffs' Motion”). (ECF No. 26.) During a teleconference on September 13, 2017, the parties confirmed that no additional factual discovery is required; that this Court should render its decision based on the record developed in the Underlying Litigation; and that in rendering its decision on plaintiff's pending Motion for Summary Judgment, this Court should rule as a matter of law on the overall merits of this declaratory judgment action. (ECF No. 33.) No additional hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons stated below, Penn National's Motion for Summary Judgment is DENIED to the extent it seeks to limit its liability to $165, 606.72. It is further ADJUDGED that Penn National is liable under the insurance contract for 25% of Heggie's damages (amounting to $251, 617.25) based on the “pro rata time-on-the-risk” principle set forth in Roberts. Accordingly, Penn National is liable to Heggie for an additional $86, 010.53 toward the Underlying Judgment.

         BACKGROUND

         Penn National issued an insurance contract to the Dackman Parties, contract number 307-0351437, for the contract period June 1, 1991 to June 1, 1992, which was renewed annually and in effect through August 1, 1997.[2] (ECF No. 1 at ¶ 8.) The insurance contract provided benefits in connection with certain real estate identified in the insurance contract, including, among other properties, 2315 East Hoffman Street in Baltimore, Maryland (the “Premises”). (Id. at ¶ 10.) The Insurance Contract included a commercial general liability coverage part. (Id. at ¶ 11.)

         Defendant Daniel Heggie (“Heggie”) was born on October 2, 1993 and began living at 2315 East Hoffman Street on January 12, 1994, when he was approximately three and one-half months of age. (ECF No. 26-1 at ¶¶ 1-2; ECF No. 29-1 at ¶¶1-2.) Heggie's tenancy there ended permanently when he vacated the Premises on September 9, 1998. (Id. at ¶ 2; id. at ¶ 2.) It is undisputed that the Premises contained chipping, peeling, and flaking lead-based paint during Heggie's tenancy there. (ECF No. 26-1 at ¶ 5.)

         On November 12, 2013, Heggie filed a lawsuit in the Circuit Court of Maryland for Baltimore City styled Daniel Mathew Heggie, Jr. v. Jacob Dackman & Sons, LLC, , Case Number 24-C-13-006788, alleging, inter alia, that the Dackman Parties had caused him to sustain certain personal injuries as a result of exposure to lead in paint on the Premises. (ECF No. 1 at ¶ 13.) The evidence presented at trial in the Underlying Litigation was that Heggie first exhibited an elevated blood lead level (“BLL”) on August 18, 1995. (ECF No. 26-1. at ¶ 7; ECF No. 29-1 at ¶ 3.) Subsequent tests revealed that Heggie also had elevated BLLs on August 18, 1995, July 8, 1997, April 13, 1999, and February 13, 2001. (Id. at ¶¶ 7-8, 28; id. at ¶¶ 3-5.) Heggie's medical causation expert, Dr. Daniel Levy, M.D., opined that Heggie's elevated BLLs were caused by his exposure to lead paint in the premises. (ECF No. 26-1 at ¶ 26.) Dr. Levy was unable to opine whether Heggie was exposed to lead paint after he vacated the Premises. (Id. at ¶ 30.) However, Dr. Levy testified that: “What the general trend was when [Heggie] moved out of [the Premises]…is that the lead levels gradually came down, that the implication of that to me is that there was not a continuing source of exposure.” (ECF No. 29-1 at ¶ 7) (citing ECF No. 26-8 at 112, Apr. 20, 2016 Trial Tr. at 112:7-10.) At the conclusion of the jury trial in the Underlying Litigation, judgment was entered against the Dackman parties in the amount of $1, 006, 469.00. (ECF No. 26-1 at ¶ 51.)

         STANDARD OF REVIEW

         Rule 56 of the Federal Rules of Civil Procedure provides that a 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(c). A material fact is one that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue over a material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. In considering a motion for summary judgment, a judge's function is limited to determining whether sufficient evidence exists on a claimed factual dispute to warrant submission of the matter to a jury for resolution at trial. Id. at 249.

         In lead paint or “continuous trigger” cases such as this, “Maryland courts determine an insurer's liability through a “pro-rata allocation by ‘time on the risk.'” Pennsylvania Nat. Mut. Cas. Ins. Co. v. Roberts, 668 F.3d 106, 111 (4th Cir. 2012). Under this principle, “[e]ach insurer is liable for that period of time it was on the risk compared to the entire period during which damages occurred.” Mayor & City Council of Baltimore v. Utica Mut. Ins. Co., 145 Md.App. 256, 313, 802 A.2d 1070, 1104 (2002) (quoting Domtar, Inc. v. Niagara Fire Insurance Co., 563 N.W.2d 724, 733 (Minn. 1997)).

         ANALYSIS

         It is undisputed that Penn National is contractually obligated to indemnify the Dackman parties pursuant to an insurance policy in effect from June 1, 1996 to August 1, 1997-that is, 426 days. (ECF No. 26-1 at ¶¶ 37-38.) It is also undisputed that the calculation of Penn National's liability is governed by the “pro rata time-on-the-risk” principle set forth in Roberts, 668 F.3d 106. (ECF No. 26-1 at ¶ 45; ECF No. 29-1 at 2-3.) Under Roberts, the “insurer is liable for that period of time it was on the risk compared to the entire period during which damages occurred.” Roberts, 668 F.3d 106, 113 (emphasis in original) (quoting Utica, 145 Md.App. 256, 802 A.2d 1070, 1103).

         Penn National asserts that the “entire period during which damages occurred” is the 2, 589 day period from January 12, 1994-when Heggie moved into the Premises-to February 13, 2001-the date of Heggie's final elevated BLL. (ECF No. 26-1 at 22-25.) Thus, Penn National asserts that its “pro rata ...


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