Commercial Union Ins. Co. v. Porter Hayden Co., 1493

CourtCourt of Special Appeals of Maryland
Citation698 A.2d 1167,116 Md.App. 605
Docket NumberNo. 1493,1493
Decision Date01 September 1996

Page 605

116 Md.App. 605
698 A.2d 1167
No. 1493, Sept. Term, 1996.
Court of Special Appeals of Maryland.
Aug. 29, 1997.

[698 A.2d 1172]

Page 616

Theodore A. Howard (Richard A. Ifft, Paul G. Roche and Rosenman & Colin, L.L.P., on the brief), Washington, D.C., for Appellant.

Lisa A. Kershner and Dwight W. Stone, II (Louis G. Close, Jr. and Whiteford, Taylor & Preston, L.L.P., on the brief), Baltimore, for Appellee.

Argued before MURPHY, C.J., and MOYLAN and EYLER, JJ.

MOYLAN, Judge.

This litigation has a tortured history and it is our earnest desire to see it resolved as expeditiously as possible. The appellee is the Porter Hayden Company ("Porter Hayden"). 1 The litigation is an action for declaratory[698 A.2d 1173] judgment brought by Porter Hayden to determine its insurance coverage. The

Page 617

appellant is the Commercial Union Insurance Company ("Commercial Union"). 2

Porter Hayden has been since the 1920's an insulation contractor in the business of selling and installing insulation at various facilities in the mid-Atlantic area. One of those facilities was the Bethlehem Steel plant at Sparrows Point. Until some time in the 1970's, Porter Hayden's insulation products contained asbestos.

Procedural Background

From August of 1976, when the first asbestos-related claim was filed against Porter Hayden, through September 21, 1990, when the declaratory judgment action that is the subject of the present appeal was filed, "thousands of lawsuits [were] brought against Porter Hayden Company by claimants who alleged bodily injury or death caused by the installation operations of the Porter Hayden companies at various industrial or construction sites" in Maryland, Virginia, New Jersey, North Carolina, and other jurisdictions. Although the declaratory judgment action literally sought formal relief with respect to only five such claims, the request for the declaration as to the coverage, in spelling out the possibly broader repercussions of the action, also referred to "numerous other claimants [who] have filed and will file similar actions against Porter Hayden." The declaration of coverage with respect to those five claims will, therefore, inevitably guide the disposition of numerous others as well. The case now before us does not concern the ultimate merits of any of those claims. It deals exclusively with the extent to which Porter Hayden enjoys insurance liability coverage from Commercial Union.

When the first claims against it were filed, Porter Hayden directed its comprehensive general liability (CGL) insurer, the Hartford Accident and Indemnity Company, to give notice of

Page 618

the claims to various other liability insurers that were "properly chargeable with the defense under [their] policy obligations." Commercial Union first received actual notice of pending asbestos-related lawsuits against Porter Hayden in early August of 1978, when it was asked by Employers' Insurance of Wausau, another of Porter Hayden's insurers, to acknowledge that it was obligated under its policy to provide coverage for claims of alleged exposure during pertinent policy periods. From the outset, Commercial Union denied any obligation to defend or to indemnify Porter Hayden for asbestos-related liability.

Before the issue of coverage between Commercial Union and Porter Hayden could be finally resolved, however, the dispute lapsed into a state of suspended animation for almost a decade. In July of 1982, the Hartford Accident and Indemnity Company, as one of Porter Hayden's insurance carriers, filed a declaratory judgment action against Porter Hayden and against Porter Hayden's other primary carriers, including Commercial Union. Before that case went to trial, however, all of the parties, including Commercial Union, entered into an "Agreement" (the "Hartford Agreement") as of November 1, 1982, by which they agreed to participate, on a shared basis, in the defense of all pending and anticipated asbestos-related claims. During the pendency of the Hartford Agreement, the parties further agreed to repeated extensions. With respect to Commercial Union and Porter Hayden, the agreement between them, as part of the larger Hartford Agreement, expired on December 31, 1986.

When, therefore, five new asbestos-related claims were filed against Porter Hayden in 1987, the dispute over coverage flared anew. Those were not pre-1987 claims and were not, therefore, covered by the Hartford Agreement. Each of those claims, moreover, was filed in the Circuit Court for Baltimore City. On August 31, 1987, Porter Hayden forwarded the five new cases to Commercial Union for defense and handling. On September 21, 1987, Commercial Union denied coverage with respect to them.

[698 A.2d 1174]

Page 619

The present litigation commenced exactly three years later, on September 21, 1990, when Porter Hayden instituted a declaratory judgment action against Commercial Union in the Circuit Court for Baltimore City. It sought a declaration of the duty of Commercial Union to defend and potentially to indemnify Porter Hayden with respect to 1) the five claims filed against Porter Hayden in August of 1987 and 2) "such other personal injury cases" filed against Porter Hayden "which may be tendered" to Commercial Union, expressly excluding, however, all cases filed before January 1, 1987 (and covered, therefore, by the Hartford Agreement). Approximately one year later, both parties sought various partial and total summary judgments with respect to certain issues in the case. Both parties duly filed oppositions to the opponent's motions for summary judgment and, in turn, replies to the respective oppositions. Hearings were held before Judge Hilary D. Caplan during January of 1992. After full discovery, briefing, oral argument, and a limited evidentiary hearing with respect to one of the issues, Judge Caplan, on February 14, 1992, issued a series of decisions and orders, purporting to resolve the dispute over coverage in favor of Porter Hayden. After a modification of two of the rulings and an ostensible reduction of the orders to final judgment on March 12, 1992, Commercial Union appealed to this Court.

Although a number of issues were raised before us on appeal and cross-appeal, we found it unnecessary in Commercial Union Ins. Co. v. Porter Hayden Co., 97 Md.App. 442, 630 A.2d 261 (1993), to deal with more than one of them. That issue concerned the timely notice of occurrence from the insured to the insurer. The resolution of that issue hinged on the choice of law between Maryland and New York. We held that Judge Caplan had been wrong in applying Maryland law to the dispute. We held that under the law of lex loci contractus and in the absence of renvoi, 3 New York substantive

Page 620

law controlled the case and that, applying New York law, Porter Hayden had failed to give timely notice to Commercial Union as required by the policies. We reversed Judge Caplan's denial of summary judgment in favor of Commercial Union on that issue. As a result of our holding on that issue, "we need[ed] not, and [did] not, reach the other issues posed by the parties." 97 Md.App. at 470, 630 A.2d 261.

Porter Hayden applied for certiorari to the Court of Appeals, which was granted on December 21, 1993. The Court of Appeals vacated the judgment of this Court and ordered that the appeal be dismissed for the reason that there was no appealable final judgment under Maryland Rule 2-602(a), which provides:

Except as provided in section (b) of this Rule, an order or other form of decision, however designated, that adjudicates fewer than all of the claims in an action (whether raised by original claim, counterclaim, cross-claim, or third-party claim), or that adjudicates less than an entire claim, or that adjudicates the rights and liabilities of fewer than all the parties to the action:

(1) is not a final judgment;

(2) does not terminate the action as to any of the claims or any of the parties; and

(3) is subject to revision at any time before the entry of a judgment that adjudicates all of the claims by and against all of the parties.

(Emphasis supplied). Porter Hayden Co. v. Commercial Union Ins. Co., 339 Md. 150, 661 A.2d 691 (1995). The case was remanded to the Circuit Court for Baltimore City for further proceedings.

The case on remand was assigned to Judge Edward J. Angeletti, Judge Caplan's having retired from the court in the interim. At a scheduling conference on September 27, 1995, Judge Angeletti decided that a jury trial was required on one unresolved issue involving disputed facts but that his adoption of the earlier legal rulings of Judge Caplan as his own would suffice to permit him to settle all other issues. The necessary

Page 621

jury trial was conducted from January 3 to January 17, 1996. Following hearings on various post-trial motions, Judge Angeletti granted Porter Hayden's Motion for Entry of Final [698 A.2d 1175] Judgment on May 7, 1996. In order to correct certain typographical errors, an Amended Order granting Porter Hayden's Motion for Entry of Final Judgment was issued on May 13. Commercial Union has appealed from that final judgment. On several limited issues, Porter Hayden has cross-appealed.

Commercial Union's Basic Contentions

Deferring for the moment Commercial Union's contentions with respect to several allegedly erroneous post-trial rulings and also deferring for the moment the two contentions raised by Porter Hayden on its cross-appeal, we will first address the five primary contentions raised by Commercial Union by way of challenging the basic propriety of the declaratory judgment in favor of Porter Hayden. Commercial Union contends:

1) that Judge Angeletti erroneously refused to conduct further evidentiary proceedings, as mandated by the Court of Appeals in Porter Hayden v. Commercial Union, 339 Md. 150, 661 A.2d 691 (1995), with respect to three of the defenses...

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