United States District Court, D. Maryland
HARTFORD ACCIDENT & INDEM. CO., Plaintiff
ZURICH AM. INS. CO., et al., Defendants
K. Bredar Chief Judge
case involves various insurance companies that allegedly
insured Tate Andale, Inc., a Maryland corporation. Between
1958 and 1985, Tate manufactured products containing asbestos
and has since been the subject of civil complaints for
asbestos-related injuries. Hartford Accident & Indemnity
Company now sues the other insurance companies that may have
insured Tate, seeking a declaration pursuant to 28 U.S.C.
§ 2201(a) as to the insurance companies' respective
liabilities for Tate's insurance coverage claims for
asbestos-related bodily injury claims. Zurich American
Insurance Company crossclaims for declaratory judgment,
restitution, and subrogation. One of the companies,
Pennsylvania National Mutual Casualty Insurance Company
("Penn National"), moves to dismiss all counts of
the complaint and crossclaim and, alternatively, to stay
proceedings. No. hearing is required. See Local Rule
105.6 (D. Md. 2016). For the reasons set forth below, the
Court will deny Penn National's motions to dismiss and
grant its motion to stay.
motion to dismiss stage, the Court takes the allegations of
the complaint as true, see, e.g., Ibarra v. United
States, 120 F.3d 472, 474 (4th Cir. 1997), and construes
any disputed allegations in the light most favorable to the
plaintiff, In re Royal Ahold N. V. Sees. & ERISA
Litig., 351 F.Supp.2d 334, 376 n.32 (D. Md. 2004)
("[Resolution of [a] factual dispute is inappropriate
when ruling on a motion to dismiss .. .."). The Court
summarizes those allegations in Hartford's complaint that
are relevant to the currently pending motions.
"designs and manufactures industrial strainers, filters,
valves, and vents, and in the past, supplied certain products
that allegedly contained asbestos." (Compl. ¶ 19,
ECF No. 1.) The complaint also refers to Tate as "Tate
Engineering, Inc." and "Tate Enterprises."
(Id. ¶ 1.)
complaint, Hartford alleges, "[o]n information and
belief," that each of the named insurance companies
issued insurance policies to Tate or its predecessors.
(Id. ¶ 12-18.) From September 1958 to September
1964, Perm National issued insurance policies to Tate.
(Id. ¶ 16.) From March 1964 to June 1970,
Zurich insured Tate. (Id. ¶ 15.) From June 1970
to June 1986, Hartford itself issued yearly policies of
liability insurance to Tate. (Id. ¶ 12.)
Hartford notes that some of these insurance policies had
asbestos exclusions. (Id. ¶ 14.) Hartford also
alleges that other insurers may have issued policies that
provide coverage for asbestos claims. (Id. ¶
claimants began to sue Tate, alleging asbestos-related bodily
injury ("asbestos suits"), Tate tendered the
asbestos suits to Hartford, Zurich, and Penn National for
insurance coverage. (Id. ¶ 20-21, 24.) Hartford
alleges that Hartford and Zurich have been defending Tate
against those suits and that Penn National has not
participated in the defense. (Id.) Each company
asserts that it has no coverage obligations for the asbestos
suits. (Id. ¶ 25-26.) Hartford's complaint
seeks a declaration as to which, and to what extent, each
insurance company has an obligation to defend or indemnify
Tate. (Id. ¶ 28, 30.)
crossclaim, Zurich adds some allegations and claims.
(Zurich's Ans., Counterclaim & Crossclaim, ECF No.
21.) Zurich alleges that the company that is now Tate Andale
was incorporated as Temco Machine Works in 1957.
(Id. ¶ 8, 11.) In 1966, Temco Machine Works
changed its name to Tate Temco. (Id. ¶ 9.) In
1985, Tate Temco entered into a purchase agreement with the
Andale Company, and its name was changed to Tate Andale.
(Id. ¶ 10-11.) Zurich repeats Hartford's
declaratory judgment claims and adds crossclaims against Perm
National for reimbursement, restitution of overpayments, and
Hartford even filed suit, Penn National sued Tate in March
2017. (Pa. Nat'l Mot. Dismiss Compl. Exh. 1, Civ. No.
ADC-17-670 Compl.) Penn National sought a declaration that it
"owes no duty under applicable law or the Alleged
Policies to indemnify or defend Tate Andale with regard to
any claims for injury that occurred during the alleged policy
periods of September 20, 1958 to March 9, 1964."
(Id. at 7.) That case-for purposes of this
Memorandum, the "Penn National case"-is currently
before another judge in this district, who has ordered that
discovery end by February 2020, that the parties file
dispositive motions by March 31, 2020, and that trial
commence sometime after June 2020. See Pa. Nat'l Mut.
Cas. Ins. Co. v. Tate Andale, Inc., Civ. No. ADC-17-670,
7/31/19 Status Report, ECF No. 77. A trial in that case would
seek to resolve whether Penn National issued the alleged
commercial liability insurance policies and what the terms of
those policies were. See id., Memo. Op. at 8-17, ECF
National moves to dismiss the instant complaint for lack of
subject matter jurisdiction, (Pa. Nat'l 12(b)(1) Mot.
Dismiss Compl., ECF No. 15), and failure to state a claim,
(Pa. Nat'l 12(b)(6) Mot. Dismiss Compl., ECF No. 16). In
the alternative, Penn National moves to stay. (Id.)
Penn National also moves to dismiss Zurich's crossclaim
for lack of subject matter jurisdiction and failure to state
a claim. (Pa. Nat'l Mot. Dismiss CC, ECF No. 41.) Because
Penn National advances similar arguments against
Hartford's complaint and Zurich's crossclaim, the
Court will analyze the motions together, turning first to
subject matter jurisdiction and second to failure to state a
claim. Then, if necessary, the Court will address whether to
Federal Rule of Civil Procedure 12(b) (1)
motion to dismiss based on lack of subject matter
jurisdiction pursuant to [Rule 12(b)(1)] raises the question
of whether the court has the competence or authority to hear
the case." Davis v. Thompson, 367 F.Supp.2d
792, 799 (D. Md. 2005). The plaintiff bears the burden of
establishing subject matter jurisdiction. Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). A challenge
to a court's subject matter jurisdiction may be either
facial, i.e., the complaint fails to allege facts upon which
subject matter jurisdiction can be based, or factual, i.e.,
the jurisdictional allegations of the complaint are not true.
Kerns v. United States, 585 F.3d 187, 192 (4th Cir.
2009). Here, Perm National appears to be making a facial
challenge. In a facial challenge, "the facts alleged in
the complaint are taken as true, and the motion must be
denied if the complaint alleges sufficient facts to invoke
subject matter jurisdiction." Id. at 192.
National argues that the court lacks subject matter
jurisdiction because Penn National is not an adverse party to
Hartford or Zurich and, as such, the proceeding fails to be a
case or controversy as required by Article III of the U.S.
Constitution. (Pa. Nat'l 12(b)(1) Mot. Dismiss Compl.
Mem. at 2, ECF No. 15-1.) Penn National bases this
conclusion on the fact that its alleged period of coverage
does not overlap with those of Hartford or Zurich.
(Id. at 3.) Citing Maryland law, Penn National
explains that Maryland has adopted a "pro-rata"
approach to losses that span multiple insurance policy
periods so that the losses are divided among insurers based
on the amount of time they each contracted to provide
coverage. (Id.) In essence, Penn National argues
that its liability to Tate, if ...