Pa. Nat'l Mut. Cas. Ins. Co. v. Kirson
| Decision Date | 16 March 2021 |
| Docket Number | Civil Action No. TDC-18-3275 |
| Citation | 525 F.Supp.3d 628 |
| Parties | PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY, Plaintiff, v. Benjamin L. KIRSON and Karen L. Kirson, Defendants, and Brionna Heckstall, Intervenor Defendant. |
| Court | U.S. District Court — District of Maryland |
Marc Andrew Campsen, Wright, Constable & Skeen, LLP, Baltimore, MD, for Plaintiff.
Andrew Janquitto, Mudd Harrison and Burch LLP, Towson, MD, for Defendants.
John Amato, IV, Goodman Meagher and Enoch LLP, Baltimore, MD, for Intervenor Defendant.
In 2017, in a civil action in the Circuit Court for Baltimore County, Maryland, Defendants Benjamin and Karen Kirson ("the Kirsons") were found liable to Intervenor Defendant Brionna Heckstall (collectively, "Defendants") for injuries she suffered from exposure to lead paint while she was their tenant. See Heckstall v. Kirson , No. 24-C-15-000776 (Cir. Ct. Balt. Cty. 2015). The Kirsons, in turn, sought indemnification for the full amount of that judgment from Plaintiff Pennsylvania National Mutual Casualty Insurance Company ("Penn National"), with which they had a commercial general liability insurance policy ("the Policy") for a portion of the time that Heckstall resided in one of their properties containing lead paint. Penn National filed a declaratory judgment action in this Court seeking a determination on the portion of the state court judgment that it is required to pay under the Policy. The central dispute in this case is whether Penn National is obligated for the entire judgment amount or for only a pro rata portion of it corresponding to its "time on the risk," consisting of the time period of lead exposure occurring while the Policy was in force. During the pendency of the present action, the Court of Appeals of Maryland decided a case addressing the question of the proper method for calculating indemnification liability in continuous exposure cases, Rossello v. Zurich American Insurance Co. , 468 Md. 92, 226 A.3d 444 (2020). With the benefit of Rossello , the parties have filed Cross Motions for Summary Judgment on the scope of Penn National's liability. Having reviewed the briefs and submitted materials, the Court finds no hearing necessary. See D. Md. Local R. 105.6. For the reasons set forth below, Penn National's Motion for Summary Judgment will be GRANTED, and Defendants’ Cross Motions for Summary Judgment will be DENIED.
Heckstall was born in 1994. Beginning in June 1996, her family lived at 1121 E. 20th Street in Baltimore, Maryland ("the 20th Street Property"), a residence which was owned by the Kirsons when Heckstall moved in but was sold by the Kirsons on September 3, 1996. On January 18, 1997, Heckstall moved with her family to another Kirson property, located at 2311 Harford Road in Baltimore, Maryland ("the Harford Road Property"). The Kirsons sold the Harford Road Property on February 28, 1997, but Heckstall and her family remained there until some point in October 1997.
On November 4, 1991, Penn National issued an automatically renewing commercial general liability ("CGL") insurance policy to the Kirsons. The Policy provided coverage for a list of specifically identified properties which the Kirsons "Own, Rent or Occupy," including the Harford Road Property but not including the 20th Street Property. On September 7, 1996, the Kirsons attempted to add the 20th Street Property to the Policy but could not do so because they had sold it four days before and thus no longer owned it.
The Policy provided coverage for, in relevant part, "those sums that the insured becomes legally obligated to pay," as a result of bodily injury "to which this insurance applies," that occurred "during the policy period," with an aggregate limit of $1,000,000. Policy at 1, 7, Penn Nat'l Mot. Summ. J. Ex. 5, ECF No. 52-6.1 "Bodily injury" is defined in the Policy as "bodily injury, sickness or disease sustained by a person," and "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Id. at 15, 17. Pursuant to an amendment to the Policy, the $1,000,000 aggregate limit applied separately to each of the properties covered by the Policy.
The Policy obligates Penn National to pay pre-judgment interest awarded against the Kirsons "on that part of the judgment we pay" and provides that when Penn National makes an offer to pay an amount equal to the limit of the coverage, it will not pay pre-judgment interest for any period of time after such an offer was made. Id. at 12. As to post-judgment interest, the Policy obligates Penn National to pay "All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in the court the part of the judgment that is within the applicable limit of insurance." Id. at 12.
The Policy remained in effect from November 4, 1991 to August 1, 1997.
On February 13, 2015, Heckstall filed suit against the Kirsons in the Circuit Court for Baltimore County ("the State Court Action"), alleging that she was injured by exposure to lead paint while living in the Kirson properties. Penn National defended the Kirsons in that action but disclaimed any obligation for injuries stemming from the 20th Street Property and reserved the right to pay any damages arising from the Harford Road Property based on the pro rata method of calculation determined by "time on the risk."
At trial, the evidence established that Heckstall had blood lead levels ("BLLs") above the United States Centers for Disease Control and Prevention safety threshold beginning in October 13, 1994 and continuing through to October 9, 2000. Based on these BLLs and other diagnostically significant information, Heckstall's expert witness concluded that Heckstall had specific developmental disabilities that had resulted from her childhood exposure to lead. On April 10, 2017, the jury returned a verdict in Heckstall's favor, awarding her $2,629,250.00 in damages. Based on Maryland's statutory cap on non-economic damages, see Md. Code Ann. Cts. & Jud. Proc. § 11-108 (West 2011), that award was reduced by the trial court to $1,959,250.00
On January 29, 2020, Penn National submitted a check to Heckstall in the amount of $37,225.75, the amount it calculated as its pro rata portion of the $1,959,250.00 judgment.
In their Motions, the parties seek summary judgment in their favor on the question of Penn National's liability to the Kirsons for the judgment against them in the State Court Action. Based on Rossello , Penn National argues that its liability is limited to $37,225.75, based on the fact that the Policy's coverage of the Harford Road Property was limited to only 42 days, from January 18, 1997 to February 28, 1997, out of the 2,189 total days of lead exposure endured by Heckstall. In turn, Heckstall, while implicitly acknowledging that Rossello requires that Penn National's liability be calculated based on a pro rata basis as measured by time on the risk, argues that Penn National is liable for the full amount of the judgment in the State Court Action based on the doctrine of unclean hands, and that Penn National is liable for pre-judgment interest in this case on the post-judgment interest that accrued on the full state court judgment.
Under Federal Rule of Civil Procedure 56, the Court grants summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In assessing the Motion, the Court views the facts in the light most favorable to the nonmoving party, with all justifiable inferences drawn in its favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court may rely only on facts supported in the record, not simply assertions in the pleadings. Bouchat v. Balt. Ravens Football Club, Inc. , 346 F.3d 514, 522 (4th Cir. 2003). A fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. A dispute of material fact is "genuine" only if sufficient evidence favoring the nonmoving party exists for the trier of fact to return a verdict for that party. Id. at 248–49, 106 S.Ct. 2505.
"When faced with cross-motions for summary judgment, the court must review each motion separately on its own merits ‘to determine whether either of the parties deserves judgment as a matter of law.’ " Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003) (quoting Philip Morris, Inc. v. Harshbarger , 122 F.3d 58, 62 n.4 (1st Cir. 1997) ).
Courts applying Maryland law have consistently found that for an injury occurring over an extended period of time, such as one based on lead paint exposure, an insurer's liability is calculated as its pro rata share of the overall judgment based on its "time on the risk"—the portion of the overall time period of exposure during which the insurer was providing coverage on the property at which the exposure occurred ("the pro rata allocation approach"). In Mayor and City Council of Baltimore v. Utica Mutual Insurance Company , 145 Md.App. 256, 802 A.2d 1070 (2002) (" Utica "), a case involving continuing property damage caused by the presence of asbestos, the Court of Special Appeals of Maryland was presented with, among other things, the question of how to allocate liability among insurers when the period of injury spanned multiple insurers. Id. at 1100. The court held that in light of the continuing nature of the asbestos injury, "the obligation to indemnify the insured ... is to be prorated among all [insurance] carriers based on their...
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