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

• Decision Date: 01 September 1993
• Docket Number: No. 132,132
• Citation: 661 A.2d 691,339 Md. 150
• Parties: PORTER HAYDEN COMPANY v. COMMERCIAL UNION INSURANCE COMPANY
• Court: Maryland Court of Appeals

Page 150

339 Md. 150

661 A.2d 691

PORTER HAYDEN COMPANY v. COMMERCIAL UNION INSURANCE COMPANY.

No. 132 Sept. Term, 1993.

Court of Appeals of Maryland.

July 17, 1995.

Reconsideration Denied Aug. 17, 1995.

Louis G. Close, Jr. (Leigh S. Halstad, Whiteford, Taylor & Preston, all on brief), Baltimore, and Leigh S. Halstad, Baltimore, for petitioner.

Theodore A. Howard (Richard H. Gimer, Richard A. Ifft, Hopkins & Sutter, all on brief), Washington, DC, for respondent.

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

ELDRIDGE, Judge.

This case concerns insurance coverage disputes between the Porter Hayden company, a former installer of asbestos-containing insulation products, and Commercial Union Insurance Company, an insurer which allegedly provided Porter Hayden with liability insurance coverage. We shall not decide the substantive issues briefed and argued by the parties because the trial court did not enter a final, appealable judgment in the action.

For many years, the Porter Hayden company installed insulation in industrial facilities throughout the Mid-Atlantic region. ¹ Until the 1970s, Porter Hayden supplied and installed asbestos-containing insulation materials at numerous industrial sites, including the Bethlehem Steel plant at Sparrows Point, Maryland. From 1941 until 1952, Porter Hayden allegedly procured liability insurance from Commercial Union.

In 1976, Porter Hayden was first served with complaints by plaintiffs who alleged that they had been injured by asbestos released from products supplied and installed by Porter Hayden. Since 1976, Porter Hayden has been sued for damages by several thousand plaintiffs in cases based on asbestos-related injuries. In connection with the asbestos litigation, Porter Hayden became involved in insurance coverage disputes with its various liability insurance carriers, including the Commercial Union Insurance Company. ²

Porter Hayden first notified Commercial Union of claims assertedly covered by Commercial Union's policies in 1978, when Porter Hayden was served with a second group of complaints commencing asbestos-related personal injury actions. Porter Hayden's comprehensive general liability insurer at that time, Employers Insurance of Wausau, informed Commercial Union of the 1978 complaints. Soon afterwards, Porter Hayden asked Commercial Union to participate in defending those claims in which the plaintiffs' exposure to asbestos had purportedly occurred during a period when Porter Hayden had allegedly been covered by Commercial Union's liability insurance policies. Commercial Union denied coverage on a number of grounds. Porter Hayden and Commercial Union disputed the issue of coverage until 1982, when Porter Hayden, in connection with insurance coverage litigation brought by another of its liability insurers, reached a settlement agreement with a number of its insurance carriers, including Commercial Union. Under the agreement, the insurers each agreed to participate in Porter Hayden's defense with respect to all asbestos cases filed against Porter Hayden before 1987. Nevertheless, the insurers reserved their right to challenge Porter Hayden's underlying entitlement to coverage.

In August 1987, Porter Hayden forwarded five recently filed asbestos cases to Commercial Union for defense and handling. Commercial Union denied coverage. On September 21, 1990, Porter Hayden instituted this declaratory judgment action against Commercial Union in the Circuit Court for Baltimore City. In its complaint, Porter Hayden alleged that it had purchased from Commercial Union a series of comprehensive general liability insurance policies which provided "premises-operations" liability insurance coverage for Porter Hayden from November 25, 1941, through November 25, 1952. Porter Hayden attached to its complaint copies of two of the liability insurance policies issued by Commercial Union to Porter Hayden. Each policy covered a one-year policy period, from November 1948 to November 1949 and from November 1949 until November 1950, respectively. Porter Hayden did not produce copies of the policies allegedly issued by Commercial Union for the other years during which it claimed that coverage had existed. Instead, Porter Hayden relied on other evidence as proof that Commercial Union had provided it with liability insurance coverage during that time period. Porter Hayden asked the circuit court to declare that Commercial Union had a contractual duty under all of the alleged policies of insurance, including the "missing" policies, to defend it in asbestos-related litigation initiated after 1986, and to pay, within policy limits, any judgments awarded against it in such litigation. In addition, Porter Hayden sought its attorneys' fees and other costs incurred in bringing the declaratory judgment action.

Commercial Union answered Porter Hayden's complaint. Without conceding that coverage existed for the claims related to the asbestos litigation, Commercial Union admitted that it had issued the 1948-1949 and 1949-1950 policies to Porter Hayden, and that the policies provided bodily injury liability coverage "on a 'per occurrence' basis." Commercial Union contested the existence, terms and conditions of the missing policies, and raised numerous defenses to Porter Hayden's assertion of insurance coverage. In addition, Commercial Union filed a counterclaim against Porter Hayden for declaratory relief and for damages. In the counterclaim, Commercial Union raised issues "concerning the obligation of Commercial Union to contribute to the defense and indemnification of claims filed against Porter Hayden on or before December 31, 1986." The insurer sought a declaration that it had no duty to defend or indemnify Porter Hayden under any policy with respect to suits filed against Porter Hayden before 1987. In its damages action against Porter Hayden, Commercial Union sought to recover the sums which it had already spent defending Porter Hayden in cases filed before 1987, alleging that there was no coverage for the asbestos-related claims under any policy of liability insurance ever issued by Commercial Union to Porter Hayden.

Porter Hayden moved to stay proceedings under Commercial Union's counterclaim. Porter Hayden contended that the settlement agreement reached in the earlier insurance coverage litigation applied to insurance coverage issues with respect to suits filed against Porter Hayden before January 1, 1987. Porter Hayden argued that the trial court should stay proceedings under the counterclaim while certain issues raised by the counterclaim were submitted to arbitration, pursuant to an arbitration clause in the settlement agreement. On February 21, 1991, the circuit court granted Porter Hayden's motion and ordered that proceedings under the counterclaim be stayed pending arbitration.

After some discovery on the issues raised by Porter Hayden's complaint, Porter Hayden and Commercial Union each filed motions for summary judgment. Porter Hayden filed a motion for partial summary judgment, seeking a declaration of Commercial Union's obligations under the 1948-1949 and 1949-1950 policies. Porter Hayden asked the circuit court to declare that Commercial Union had a duty under those policies to defend and indemnify it in asbestos-related litigation initiated after 1986. Porter Hayden's motion for partial summary judgment raised no issues relating to coverage under the missing policies.

In response, Commercial Union filed three separate motions for summary judgment. Each of Commercial Union's motions for summary judgment was based on a distinct ground. Commercial Union argued that the Maryland statute of limitations barred Porter Hayden's action. Moreover, Commercial Union contended that the asbestos-related disease claims against Porter Hayden fell within "products hazards" coverage rather than "premises-operations" coverage, so that Porter Hayden was precluded from recovery under its "premises-operations" policies. In addition, the insurer argued that it was entitled to summary judgment with regard to all policies because Porter Hayden had allegedly failed to give it notice of each occurrence "as soon as practicable," as contemplated by the policies.

Commercial Union also filed a motion for partial summary judgment, based upon the missing policies. Commercial Union argued that Porter Hayden could not, as a matter of law, produce sufficient evidence of the existence, terms and conditions of the missing policies for Porter Hayden to establish coverage under the alleged policies.

The circuit court held hearings with respect to the various motions for summary judgment. In addition, the circuit court conducted a "court trial" in connection with Commercial Union's motion for partial summary judgment based on the missing policies. At the beginning of the "court trial," the circuit court made the following statement:

"The Court is going to hold sub curia the issue of the partial summary judgment regarding the lost policies and we will take testimony today on that issue, which is a Court trial on that issue."

While acknowledging that this procedure might not be in accordance with "the summary judgment rule," ³ counsel for both sides acquiesced in the procedure.

On February 14, 1992, the circuit court issued a series of orders in the case. The court granted Porter Hayden's motion for partial summary judgment with respect to Commercial Union's obligation to defend and potentially to indemnify Porter Hayden under the 1948-1949 and 1949-1950 policies. In granting Porter Hayden's partial summary judgment motion, the trial court held that Maryland law applied to the insurance coverage issues in the case. The circuit court, by a series of separate written orders, denied each of Commercial Union's motions for summary judgment. The circuit court held that Porter Hayden's claims were not barred under the applicable statute of limitations, that...