Porter Hayden Co. v. Bullinger, 56

• Decision Date: 01 September 1997
• Docket Number: No. 56,56
• Citation: 713 A.2d 962,350 Md. 452
• Parties: PORTER HAYDEN COMPANY et al. v. Barbara BULLINGER et al. ,
• Court: Maryland Court of Appeals

Page 452

350 Md. 452

713 A.2d 962

PORTER HAYDEN COMPANY et al. v. Barbara BULLINGER et al.

No. 56, Sept. Term, 1997.

Court of Appeals of Maryland.

May 15, 1998.

Reconsideration Denied June 26, 1998.

Gardner M. Duvall, Dwight W. Stone, II, Padriac McSherry Morton, Whiteford, Taylor & Preston. L.L.P., Baltimore, for Porter Hayden Co.

Thomas G. Hungar (Larry L. Simms, Gibson, Dunn & Crutcher, L.L.P., Washington, DC; John P. Sweeney, Gregory Lockwood, Miles & Stockbridge, Baltimore, all on brief), for Owens Corning.

William C. Burgy, Timothy J. Hogan, (Peter T. Nicholl, the Law Offices of Peter T. Nicholl), Baltimore, John Herrick (Ness, Motley, Loadholt, Richardson & Poole, Charleston, SC; David M. Layton, Ashcraft & Gerel, Baltimore, all on brief), for respondents.

Russell D. Karpook, Lee Baylin, Lisa-Gail Kingsley Jenkins, Francomano & Karpook, P.A., Baltimore, amicus curiae.

Elizabeth D. Rodriguez, Francis J. Lawall, Charles H. Carpenter, Pepper, Hamilton & Scheetz, L.L.P., Washington, DC, amicus curiae.

David T. Austern, Pamela Crewe-Allen, Manville Personal Injury Settlement Trust, Fairfax, VA, amicus curiae.

Anne E. Cohen, Debevoise & Plimpton, New York City, amicus curiae.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER and WILNER, JJ., and DALE R. CATHELL, Judge (Specially Assigned).

DALE R. CATHELL, Judge (Specially Assigned).

We granted the petition for writ of certiorari presented by Owens Corning Fiberglass Corporation (Owens Corning) and Porter Hayden Company (Porter Hayden), petitioners, to address three issues arising out of verdicts rendered against them in a consolidated asbestos-related personal injury action in the Circuit Court for Baltimore City. The issues presented are: (1) whether the trial court had the authority to determine the application of co-defendant contribution claims when a federal court was to address the application of Maryland set-off principles in a pending federal class action proceeding involving the parties to the instant appeal; (2) whether the trial court erred in refusing to disclose to petitioners the amount in the settlement agreements negotiated between the plaintiffs and other joint tort-feasors; and (3) whether a default judgment constitutes a finding of liability for purposes of the application of section 3-1404 of the Courts and Judicial Proceedings Article. Because of our resolution of the second issue, it is unnecessary for us to address the first issue presented by petitioners. We shall also address the third issue.

I. FACTS

This appeal requires us to examine two separate sets of facts that arose out of actions filed in different courts. The first set of facts involved two federal actions: one bankruptcy adjudication and one class action settlement. The second set involves the instant appeal. We shall discuss these facts separately.

A. The Federal Cases

In 1982, Johns-Manville Corporation (Johns-Manville), a manufacturer of asbestos-related products, filed for bankruptcy primarily because of numerous asbestos-related claims brought against it. As a result of the Johns-Manville bankruptcy, the Manville Personal Injury Settlement Trust (Manville Trust) was created to compensate persons injured by asbestos-containing products manufactured by Johns-Manville. See In re Johns-Manville Corp., 68 B.R. 618 (S.D.N.Y.1986), aff'd sub nom, Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.1988) (Manville I ).

In 1990, a class action for all of the Manville Trust beneficiaries, which included the parties in this case, was created to supersede all litigation pending against the trust in both federal and state courts. The class was created because it became apparent the trust was inadequately funded to compensate all possible beneficiaries. In 1991, a settlement regarding the distribution of Manville Trust funds was reached. See In re Joint E. & S. Dists. Asbestos Litig., 129 B.R. 710 (E.D.N.Y. & S.D.N.Y.1991) (Manville II ). The Court of Appeals for the Second Circuit, however, vacated approval of the settlement. See In re Joint E. & S. Dists. Asbestos Litig., 982 F.2d 721 (2d Cir.1992) (Manville III ).

Following the remand, the Trust Beneficiaries again reached a settlement. Pursuant to this settlement agreement, the Manville Trust was recapitalized and all claims against the Trust were to be removed from the various tort systems and processed according to administrative procedures called the Trust Distribution Process (TDP). Pursuant to the TDP, numerous categories of diseases resulting from exposure to asbestos were created and a monetary value placed on each category of disease. The TDP also enumerated the methods by which a co-defendant's set-off would be calculated in litigation involving the Trust Beneficiaries. The Stipulation of Settlement, however, explicitly excluded claims arising in Maryland with respect to the appropriate set-off provisions. The Stipulation of Settlement provided:

Section H.3 of the TDP, which deals with calculation of set-off, shall not apply by operation of this Stipulation with respect to asbestos health claims arising under Maryland law. The parties consent to trial by the Courts of the issue of appropriate set-off rules that should be developed with respect to Manville or the Trust in connection with claims arising under Maryland law....

In re Joint E. & S. Dists. Asbestos Litig., 878 F.Supp. 473, 578 (E.D.N.Y. & S.D.N.Y.1995) (Manville IV ).

The Court of Appeals for the Second Circuit vacated the lower court's approval of the settlement with respect to the Maryland set-off issue. It stated that by refusing to resolve the disagreement as to the Maryland set-off issue, the trial court "abstained from deciding the issue left unresolved by the Settlement." In re Joint E. & S. Dists. Asbestos Litig., 78 F.3d 764, 775 (2d Cir.1996) (Manville V ). The court held such an abstention was inappropriate and remanded the case back to the district court for a determination of the Maryland set-off issue.

On remand the federal district court, attempting to predict what the Maryland Court of Appeals would decide if faced with the Maryland set-off issue, held that in determining the appropriate set-off, the courts were to "exclude the Trust from calculations of other settling defendants' pro rata shares, and ... credit amounts settled by the Trust to joint tortfeasors who have not settled." In re Joint E. & S. Dists. Asbestos Litig., 929 F.Supp. 1, 9 (E.D.N.Y. & S.D.N.Y.1996) (Manville VI ). The federal district court, however, rendered this judgment on 10 June 1996, after the Maryland trial court rendered its judgment from which the instant appeal arose.

B. The Instant Appeal

Nick Zumas, Patrick McCaffery, John Grimshaw, Ethel Marie Granski, Casimir Balonis, and Frank Krueger each filed suit in the Circuit Court for Baltimore City against petitioners and numerous other defendants, each alleging that exposure to products manufactured by petitioners caused him or her to contract asbestos-related mesothelioma. The cases were consolidated for trial by an order dated 3 April 1995.

Porter Hayden filed a third-party contribution claim against Babcock & Wilcox (B & W) on 24 April 1995. After B & W failed to file an answer and respond to discovery requests, Porter Hayden moved for default. Porter Hayden's default motion was granted on its third-party complaint against B & W, and the court entered an order of default in favor of Porter Hayden. The court ultimately entered a default judgment against B & W on 30 August 1995.

On 21 December 1995, the jury returned verdicts in favor of the plaintiffs in the Zumas, McCaffery, Grimshaw, and Granski cases. In order to reduce the verdicts to judgment, the plaintiffs provided information to the trial court for in camera consideration regarding settlements with the Manville Trust and with other settling joint tort-feasors. ¹ Both petitioners sought to obtain this settlement information in order to understand and calculate the final judgment amounts. The court denied their requests and rendered final judgments on 13 March 1996, without affording petitioners an opportunity to examine this settlement information. In rendering the final judgments and accounting for the Manville Trust, the trial court considered the trust a joint tort-feasor but, unlike the federal court, granted a pro tanto reduction in the verdicts rendered against petitioners.

Owens Corning appealed to the Court of Special Appeals from the judgments rendered against it and in favor of the McCaffery, Zumas, Grimshaw, and Granski plaintiffs. Porter Hayden appealed only from the verdict rendered in the Grimshaw case.

The Court of Special Appeals affirmed the judgment of the trial court. As to whether the trial court had authority to reduce the verdicts to judgment despite the pending federal class action, the appellate court held the circuit court "had fundamental jurisdiction to adjust compensatory damages and issue a final judgment in the instant cases." Anchor Packing Co. v. Grimshaw, 115 Md.App. 134, 173, 692 A.2d 5, 24 (1997). The Court of Special Appeals also held the amounts of the settlement agreements properly were withheld from petitioners. With respect to the default judgment entered against B & W, the court held the trial court lacked the authority to "reduce Porter Hayden's pro rata share of the judgment because it was not established that B & W was a joint tort-feasor." Id. at 185, 692 A.2d at 30.

We issued a writ of certiorari to address the three issues presented by petitioners. Prior to oral argument, this Court was informed that Owens Corning settled with plaintiffs McCaffery and Zumas. Accordingly, Owens Corning appeals only from the verdicts rendered against it in the Grimshaw and Granski cases. Porter Hayden still appeals only from the judgment rendered in the Grimshaw case. Barbara Bullinger is the personal representative of the Grimshaw estate. We shall refer to Bullinger and Granski...