Chantel Associates v. Mount Vernon Fire Ins. Co.

• Decision Date: 01 September 1994
• Docket Number: No. 71,71
• Citation: 656 A.2d 779,338 Md. 131
• Parties: CHANTEL ASSOCIATES, Joel David Chananie & Teresa Levitin v. MOUNT VERNON FIRE INSURANCE COMPANY. ,
• Court: Maryland Court of Appeals

Page 131

338 Md. 131

656 A.2d 779

CHANTEL ASSOCIATES, Joel David Chananie & Teresa Levitin v. MOUNT VERNON FIRE INSURANCE COMPANY.

No. 71, Sept. Term, 1994.

Court of Appeals of Maryland.

April 13, 1995.

Glenn M. Cooper (Patricia M. Weaver, Paley, Rothman, Goldstein, Rosenberg & Cooper, Chtd., all on brief), Bethesda, for petitioner.

Robert K. Nead (Sandra B. Minton, O'Doherty, Nead, Hoffman & Karey, all on brief), Baltimore, Julie C. Janofsky (Ward, Janofsky & Truhe, P.A., all on brief), Towson, (Sidney G. Leech, Linda S. Woolf, Goodell, DeVries, Leech & Gray, Catherine A. Potthast, Smith, Somerville & Case, all on briefs), Baltimore, for respondent.

Robert E. Scott, Jr., Stephen S. McCloskey, Semmes, Bowen & Semmes, Baltimore, for amicus curiae Maryland Cas. Co.

H. Thomas Howell, David A. Carter, John S. Bainbridge, Jr., Kathleen D. Leslie, Charles J. Kresslein, Howell, Gately, Whitney & Carter, Towson, for amicus curiae American Ins. Assn.

Mark Kolman, Anderson Kill

Olick & Oshinsky, P.C., Washington, DC, for Mid-America Legal Foundation, of counsel Irene C. Warshauer, Bhamati Viswanathan, Anderson Kill Olick & Oshinsky, P.C., Martha Churchill, Mid-America Legal Foundation, of Chicago, IL.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, BELL and RAKER, JJ.

CHASANOW, Judge.

This appeal arises out of an action filed by Scottsdale Insurance Company (Scottsdale) against Chantel Associates (Chantel) seeking a declaration that Scottsdale had no duty to defend or indemnify Chantel in a tort action. ¹ That tort action (hereinafter referred to as the Epperson action) was instituted in the Circuit Court for Baltimore City against Chantel ² by Valerie McCree, individually and on behalf of her son, Napoleon Epperson, III, (Napoleon) and Lynelle McCree, individually and on behalf of her children, Donald Wilson, Jr. (Donald) and Quanna Wilson (Quanna) (hereinafter referred to collectively as the Epperson plaintiffs). The complaint and subsequent amendments filed in the Epperson action alleged that the plaintiffs were injured as a result of the exposure, ingestion and consumption of lead paint while residing at Chantel's property on 1224 West Lafayette Avenue in Baltimore.

The original complaint alleged that "[d]uring the time the infant [plaintiffs] resided in the [1224 West Lafayette Avenue] dwelling, the infant[s] ingested and consumed paint containing lead, and lead pigment thereby causing the infant [plaintiffs] to suffer the injuries, illness and infirmities hereinafter alleged." Although the original complaint did not specify a date when the initial injuries occurred, it alleged that the plaintiffs "became seriously, painfully and permanently injured" on or about March, 1987. A further amendment by interlineation to the original complaint alleged that Napoleon and Donald began to permanently reside at 1224 West Lafayette Avenue in September, 1985 and that Quanna resided at the dwelling from the time of her birth in May, 1986. The amendment further alleged that:

"From the beginning of the time that each child resided in the premises each was exposed to lead paint, lead chips and lead dust which were ingested in some manner by the children. Each, from the beginning of their residence was injured by this exposure, as the ingestion of lead began a process of cellular damage." (Emphasis added).

During the period of time relevant to this appeal, four insurers provided liability insurance coverage to Chantel. Those insurers were Empire Indemnity Insurance Company (Empire), Mount Vernon Fire Insurance Company (Mount Vernon), Scottsdale, and Allstate Insurance Company (Allstate). Empire issued a general liability insurance policy to Chantel which provided coverage from April 1, 1984 through April 1, 1985. Mount Vernon issued a general liability insurance policy to Chantel which provided coverage from April 1, 1985 through March 12, 1986. Scottsdale issued two consecutive general liability insurance policies to Chantel which provided coverage from March 12, 1986 through March 12, 1988. Allstate issued a personal umbrella insurance policy to Chananie and Levitin on February 10, 1983 which was renewed annually through February 10, 1993. The Allstate personal umbrella policy provided "excess" liability coverage for certain "occurrences." ³

Each of the general liability insurance policies issued to Chantel required the insurer to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury ... caused by an occurrence...."

The policies define "bodily injury" as:

"bodily injury, sickness or disease...."

The policies define an "occurrence" as:

"an accident, including continuous or repeated exposure to conditions, which results in bodily injury ... neither expected nor intended from the standpoint of the insured." ⁴

Upon receipt of the Epperson complaint, Chantel notified each insurer of the complaint filed against it and requested that each insurer provide it with representation in the Epperson action. Mount Vernon and Allstate refused to defend Chantel. Scottsdale responded to Chantel's request for representation by informing it that both its policies contained exclusions from coverage for injuries arising out of lead paint poisoning; ⁵ however, after Chantel disputed the validity of the lead paint poisoning exclusions, Scottsdale undertook Chantel's defense in the Epperson action. Scottsdale reserved its right to cease defending Chantel as soon as it could obtain a judicial determination that the lead paint poisoning exclusions were valid. Empire retained counsel to defend Chantel in the Epperson action but shortly thereafter Scottsdale took over the entire defense.

After undertaking Chantel's defense in the Epperson action, Scottsdale filed a declaratory judgment action in the Circuit Court for Baltimore City against Chantel and the Epperson plaintiffs seeking a determination that it had no duty to defend or indemnify Chantel in the Epperson action based on its policies' exclusions from coverage for injuries arising out of lead paint poisoning. Scottsdale later amended its declaratory judgment action, joining Empire, Allstate and Mount Vernon as defendants, and requesting reimbursement for costs it incurred in defending the Epperson action from those insurers found to have a duty to defend Chantel in that action. Chantel then filed a motion for summary judgment seeking a declaration that Allstate, Empire, and Mount Vernon were all under a duty to defend Chantel. The motion also sought a declaration that Mount Vernon and Allstate were under a duty to indemnify Chantel up to the limits of their respective insurance policies. Chantel's motion was supported by an affidavit of psychologist Stephen R. Schroeder which stated:

"An injury is the alteration of structure or function of a cell, tissue or organ. Physical or chemical damage to the body which may be detectable only on a microscopic or subclinical level also constitute[s] an injury.... [T]here are injuries to cells, tissues and organs caused by exposure to lead paint, lead paint chips, lead paint fumes, and/or lead paint dust, even though the injuries may not be noticeable to a harmed individual or diagnosable by a clinician until some later point in time.

Lead ... is especially harmful to the developing brain and nervous systems of fetuses.... There is probably no safe threshold at which lead has no effect.... [C]hildren under ... age three, whose brains are rapidly growing and developing are most vulnerable to damage by low levels of lead exposure.

* * * * * *

There is general agreement that human infants and toddlers below the age of three years are at special risk because of in utero exposure.... Cumulative exposure has many central nervous system effects relatively immediately. These effects can accumulate and children show great variability in their response to different amounts of lead ingestion. Thus they may be suffering from the effects of cumulative low level lead exposure years before they are clinically observable.

Thus, it is my opinion ... that exposure to lead produces both direct and indirect damage to the cells, tissues and organs of the body that begin immediately or shortly after exposure, notwithstanding the fact that the symptoms, especially at low levels of exposure, may not be apparent until much later, sometimes years after exposure." (Emphasis added).

Empire, Mount Vernon, and Allstate also filed summary judgment motions, each seeking a declaration that it was under no duty to defend or indemnify Chantel in the Epperson action.

After a hearing on the motions for summary judgment, the circuit court (Rombro, J.) issued an order granting Scottsdale's requested relief and declaring that Scottsdale's "policy clearly had an exclusion for both indemnification and ... defense of any lead paint suit [a]nd that was ... clearly the understanding between the parties." The court granted Empire's motion for summary judgment and held that it had no duty to defend or indemnify Chantel in the Epperson action because "clearly, the policy expired on April 1, 1985.... Empire cannot possibly be responsible because ... [the Epperson plaintiffs] weren't even living in the premises" when the policy was in effect. The court denied Mount Vernon's motion for summary judgment and declared that Mount Vernon must defend Chantel Associates "against all personal injury lead-related claims brought by any or all of the plaintiffs in the Epperson case." The court further ordered Mount Vernon to indemnify Chantel for the "amount of any judgments rendered against [Chantel] ... in favor of any or all of the plaintiffs" in the Epperson action. The court granted Allstate's motion for summary judgment in part on the ground that its homeowner's policy did not provide coverage to Chantel in the Epperson action. The court denied the remainder of Allstate's motion and...