Brooks v. Housing Authority

• Decision Date: 17 November 2009
• Docket Number: No. 14 September Term, 2008.,14 September Term, 2008.
• Citation: 411 Md. 603,984 A.2d 836
• Parties: Devonte A. BROOKS, a minor, etc., et al. v. HOUSING AUTHORITY OF BALTIMORE CITY, et. al.
• Court: Court of Special Appeals of Maryland

984 A.2d 836

411 Md. 603

Devonte A. BROOKS, a minor, etc., et al. v. HOUSING AUTHORITY OF BALTIMORE CITY, et. al.

No. 14 September Term, 2008.

Court of Appeals of Maryland.

November 17, 2009.

Reconsideration Denied January 8, 2010.

Suzanne C. Shapiro (Saul E. Kerpelman & Associates, P.A., Baltimore), on brief, for Petitioners.

J. Marks Moore, III (J. Marks Moore, III, LLC, Baltimore, Samuel M. Riley, Samuel M. Riley, LLC, Baltimore), on brief, for Respondents.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, BARBERA, and JOHN C. ELDRIDGE (Retired, Specially assigned), JJ.

BARBERA, J.

We decide in this case whether the Housing Authority of Baltimore City ("HABC") enjoys governmental immunity from suits in tort if it has exhausted the limits of its commercial insurance policy in payment of prior claims. The case comes to us from the grant of summary judgment in favor of the HABC, the respondent, in a lead paint action brought by the petitioner, Devonte A. Brooks ("Brooks"). The HABC argued that, under Maryland's "Housing Authorities" law, Md.Code (1957, 2003 Repl.Vol.), Art. 44A,¹ as construed by Jackson v. Housing Opportunities Comm'n of Montgomery County, 289 Md. 118, 422 A.2d 376 (1980), it enjoys governmental immunity from suit because it exhausted the limits of its liability insurance policy.

The Circuit Court for Baltimore City agreed that, under Jackson, the HABC's governmental immunity was waived only up to the limits of its insurance coverage. The court concluded, moreover, that it was undisputed that the HABC had insurance coverage at the time the cause of action arose but, by the time Brooks filed suit, the coverage was exhausted. The court therefore ruled that the HABC was entitled to summary judgment.

Brooks noted an appeal to the Court of Special Appeals, which affirmed the judgment in an unreported opinion. For the reasons we shall explain, we reverse. We hold that Article 44A, when read in its entirety, effects a complete waiver of governmental immunity from suit. By so holding we necessarily repudiate our language in Jackson stating the contrary. 289 Md. at 130, 422 A.2d at 382.

I.

Brooks was born on November 4, 1993. Since then, he has lived with his mother in Baltimore City public housing, operated by the HABC. Brooks developed elevated blood lead levels, which he alleges resulted from his exposure to lead-based paint in the housing where he resided. Brooks, through his mother, Kimberly Wright, filed suit against the HABC on March 15, 2004. Brooks alleged negligence and violations of the Maryland Consumer Protection Act ("CPA"), Md.Code (1975, 2000 Repl.Vol.), §§ 13-301-13-501 of the Commercial Law Article ("CL"), and sought damages resulting from his injuries.²

The HABC filed a motion for summary judgment, arguing that its immunity from suit was waived only to the limits of its commercial insurance policy, which was exhausted by the time of Brooks's suit. The commercial insurance policy (hereafter the "Policy") to which the HABC referred was purchased by the HABC in 1993 from the Housing Authority Risk Retention Group ("HARRG").

The Policy was for three years, running from June 1, 1993 through June 1, 1996. Subsection H of the Policy contained a "Lead Based Paint Liability" rider, insuring the HABC liability coverage against "`bodily injury' arising from the ingestion of or exposure to lead-based paint" occurring after June 1, 1988. The Policy had an annual coverage limit of $500,000 per occurrence and in the aggregate, on a "claims-made basis," and included a $25,000 per-claim deductible. The Policy was subject to reduction for payment of claims, judgments, settlements, legal defense, and related costs.

The "Special Conditions" subsection of the lead-based paint liability rider provided that, if the lead-based paint coverage were cancelled, the HABC was entitled to obtain either a 3-month or a 15-month extension of coverage (commonly known as a "reporting tail"). The 3-month reporting tail would ensue automatically upon the cancellation date, without an additional premium paid. The 15-month reporting tail was available upon written request within 30 days of cancellation and payment of an additional premium to be determined by HARRG. Under the terms of the rider, any lead-based paint claims arising during the period of the reporting tail would be covered under the terms and conditions of the last annual coverage period during which coverage was in place. The Policy also provided that, if during an annual coverage period and any reporting tail the HABC were to supply HARRG written notice that the HABC "[became] aware of any circumstances which may subsequently give rise to a claim being made against [the HABC] ... for damages arising out of the ingestion of or exposure to lead-based paint," then a claim relating to those circumstances and later brought against the HABC would be considered to have been made during the coverage period when the written notice was received.

On April 18, 1996, HARRG cancelled the lead-paint coverage rider in the Policy, effective immediately. After properly notifying HARRG of its intention to do so, the HABC purchased the 15-month reporting tail through July 18, 1997, and paid the additional premium of $74,880.27. The HABC thereby continued, through July 18, 1997, the $500,000 aggregate coverage limit provided during the 1995-96 annual coverage period.

Raymond A. L'Altrelli is the Insurance/Risk Manager for the HABC. In May 1997, Mr. L'Altrelli provided HARRG a list of names and other pertinent information concerning 73 children who had elevated blood lead levels (EBLs). Brooks, whose elevated blood lead level had been submitted to the HABC by city health authorities in April 2006, was among the children listed in the HABC's submission to HARRG. The following month, the HABC sent a second list to HARRG. That list, too, contained Brooks's name. Mr. L'Altrelli stated in the letter that accompanied the first list that the "referenced EBL's are to be noted as occurrences only (since claims may never be filed)." (Emphasis in original.) He added that the HABC understood that, by supplying HARRG with written notice, HARRG would "afford coverage and defense under the current Policy provisions" should claims subsequently be filed by any of the children on the list. The HABC did not purchase lead-based paint liability coverage beyond the date of expiration of the reporting tail, July 18, 1997.

The Lawsuit

We have said that Brooks, through his mother, filed suit against the HABC in March 2004. The HABC timely answered and thereafter moved for summary judgment. The HABC argued that Brooks's claim was reported to HARRG under the 1995-96 Policy year, pursuant to the 15-month reporting tail, and, as of September 19, 2003, the $500,000.00 coverage for lead-based claims was exhausted. The HABC maintained that Article 44A waives its governmental immunity only up to the available limits of its insurance policy. The HABC relied on the holding of Jackson, which states that the "combination of" the relevant statutory provisions "effects, by necessary and compelling implication, a limited waiver of the defense of sovereign immunity to the extent of permitting recovery only out of any sum payable on behalf of the HOC (Housing Opportunities Commission) by its insurer under applicable liability coverage." 289 Md. at 130, 422 A.2d at 382. In support of summary judgment, the HABC submitted, inter alia, an affidavit by HARRG's Regional Claims Manager attesting that Brooks's potential claim was reported in the 1995-96 Policy year and, as of September 19, 2003, the $500,000 limit of coverage was exhausted.

Brooks opposed the summary judgment motion on the ground that the HABC was not entitled to invoke governmental immunity in this case. Brooks argued that the language in Jackson to the effect that the statute creates only a partial waiver of immunity is dicta because it was not necessary to the decision in that case. Brooks further argued that the court should treat the facts of his case more like the cases at issue in Gibson v. Housing Auth. of Baltimore City, 142 Md.App. 121, 131, 788 A.2d 234, 240, cert. denied, 369 Md. 182, 798 A.2d 554; vacated sub nom Housing Auth. of Baltimore City v. Smalls, 369 Md. 224, 798 A.2d 579 (2002).³ Gibson presented the question whether the HABC could assert governmental immunity for lead-based paint claims that arose when the HABC was not covered by a liability insurance policy. The intermediate appellate court answered "no" to that question, analyzing the issue as follows HABC argues that its failure to carry statutorily required liability insurance for "all risks and hazards" will prevent the agency from being able to satisfy a judgment rendered in favor of the children and thus the HABC is immune from suit. If such a practice would be allowed, governmental agencies would be able to manufacture their own immunity simply by allowing their insurance to lapse. In instances where the legislature has mandated that the governmental agency carry insurance to allow for payment of successful suits brought against the agency, the autogenous of immunity would fly in the face [of] the legislative intent without submitting to it and create inequitable results. We will not allow such inequities to occur.

Therefore, in instances where the legislature has created a waiver from immunity for a governmental entity and required that insurance be obtained for liabilities resulting from its governmental conduct, that entity cannot fabricate its own immunity [ ] by failing to insure against those liabilities.

Gibson, 142 Md.App. at 131, 788 A.2d at 240.

Brooks argued, by extension of the logic underpinning Gibson, that the HABC attempted to manufacture its immunity by under-insuring itself and therefore was not entitled in his case to the defense of government immunity.

The Circuit Court interpreted Jackson and Gibson to hold that, "if ...