Rossello v. Zurich Am. Ins. Co.
| Decision Date | 03 April 2020 |
| Docket Number | No. 24,24 |
| Parties | PATRICK ROSSELLO v. ZURICH AMERICAN INSURANCE COMPANY |
| Court | Court of Special Appeals of Maryland |
INSURANCE LAW—INDEMNITY—COMPREHENSIVE GENERAL LIABILITY POLICIES—APPORTIONMENT—PRO RATA—TRIGGER OF COVERAGE—INJURY-IN-FACT TRIGGER—CONTINUOUS TRIGGER The Court of Appeals held that damages from a continuous bodily injury judgment must be allocated on a pro rata, time-on-the-risk basis across all insured and insurable periods triggered by the plaintiff's injuries. Informed by the language of Comprehensive General Liability policies and longstanding precedent adopted by the Court of Special Appeals and a majority of other jurisdictions, the Court affirmed the judgment of the Circuit Court for Baltimore City.
Barbera, C.J. McDonald, Watts, Hotten, Getty, Booth, Greene, Clayton, Jr., (Senior Judge, Specially Assigned) JJ.
Opinion by Getty, J. Patrick Rossello was diagnosed with mesothelioma in 2013, nearly forty years after exposure to asbestos at his place of work in 1974. Mr. Rossello subsequently won a $2,682,847.26 judgment against the asbestos installer. Later, the Circuit Court for Baltimore City issued a writ of garnishment requiring the insurer of the asbestos installer to satisfy the judgment. After a series of motions resulting in the court granting the insurer's motion to stay the garnishment, both parties filed cross-motions for summary judgment. The question before the circuit court was how to allocate loss, if at all, among various triggered insurance policies or periods of no insurance because the asbestos installer was only insured by the insurer from 1974 to 1977 through four separate Comprehensive General Liability policies. Mr. Rossello argued that the insurer was liable for the entirety of the judgment spanning forty years, but the Circuit Court for Baltimore City found that Mr. Rossello's damages must be allocated on a pro rata, time-on-the-risk basis across all insured and insurable periods triggered by Mr. Rossello's injuries, i.e., 1974 to 1985—with 1985 being the last practicable year that the asbestos installer could have acquired asbestos liability insurance. Now, we consider whether the circuit court properly applied the pro rata allocation approach, or instead, whether it should have applied a joint-and-several approach that would have required the insurer to cover the entire judgment.
Lloyd E. Mitchell, Inc. ("Mitchell") was a mechanical contractor that sold, distributed, and installed products containing asbestos until 1976 when it ceased all operations. From January 1, 1974 through July 31, 1977, Mitchell was insured by theMaryland Casualty Company1 under a series of standard Comprehensive General Liability ("CGL")2 policy agreements (collectively, the "Policies").3 Maryland Casualty Company issued one primary insurance policy and one umbrella/excess policy to Mitchell for each of the following policy periods:
The relevant policy language is substantively the same for each of the Policies.
The Policies require the Maryland Casualty Company to pay on behalf of Mitchell "all sums which the insured shall become legally obligated to pay as damages becauseof . . . bodily injury . . . to which this insurance applies, caused by an occurrence." The "Definitions" section of the Policies provide two related and important definitions:
The Policies contain two limits on Mitchell's liability: a "per occurrence" limit and an "aggregate" limit. The per occurrence limit is the maximum amount Mitchell will pay for all losses resulting from any one occurrence. The aggregate limit is the maximum total amount Mitchell will pay for all insurable losses regardless of the number of occurrences or losses. Both the per occurrence and the aggregate limits are $1 million for Mitchell's primary policies and $2 million for the umbrella/excess policies.
After it ceased operations in 1976, Mitchell's last policy expired on July 31, 1977, after which it never again acquired insurance.
In 1974, Petitioner Patrick Rossello worked in the Union Trust Bank Building in which Mitchell was performing construction and renovations. Mr. Rossello unknowingly inhaled asbestos originating from the construction products used by Mitchell. Mr. Rossello's injuries developed over the next forty years, manifesting in a mesothelioma diagnosis in 2013. Mr. Rossello brought this strict liability and negligent failure to warn action against Mitchell in the Circuit Court for Baltimore City. The case proceeded to trial in April 2016 and the jury returned a verdict in favor of Mr. Rossello for compensatorydamages in the amount of $8,114,166.79. The trial court reduced the judgment for the settlement of joint tortfeasors4 and entered a final judgment in the amount of $2,682,847.26 plus interest and costs.5
To collect his judgment, Mr. Rossello initiated garnishment proceedings against Respondent Zurich American Insurance Company ("Zurich"), successor by merger to Maryland Casualty Company. The Circuit Court for Baltimore City issued a writ of garnishment directed at Zurich as insurer of Mitchell. After a series of motions resulting in the court granting Zurich's motion to stay the garnishment, both parties filed cross-motions for summary judgment. The question before the circuit court was how much Zurich was responsible for paying on the judgment against Mitchell. Mr. Rossello contended that the entire $2,682,847.26 judgment should be satisfied by the 1974 CGL policy, not subject to the per occurrence or aggregate limits. Zurich rebutted that the relevant period of time to allocate the judgment is forty years, 1974 through 2013, i.e., the year of exposure through the year of manifestation and diagnosis of mesothelioma. In that scenario, Zurich would be responsible for one-fortieth of the judgment (or $67,071.19) for each year of coverage, subject to aggregate limits. Zurich argued in the alternative that the relevant time period is twelve years, from 1974 through 1985—1985 being the last yearthat asbestos risk insurance was available to Mitchell. In that scenario, $223,570.60 (one-twelfth of $2,682,847.26) would be the maximum amount recoverable from Zurich as to any one policy year from 1974 through 1977, while Mitchell stood self-insured from 1986 to 2013.
In a written opinion and order, the circuit court rejected Mr. Rossello's contention that he is entitled to the entire judgment under the 1974 policy. The circuit court applied Maryland pro rata allocation principles, as adopted in Lloyd E. Mitchell, Inc. v. Maryland Casualty Co., 324 Md. 44 (1991) and Mayor and City Council of Baltimore v. Utica Mutual Insurance Co., 145 Md. App. 256 (2002).6 Under those principles, the court found that Mr. Rossello's damages must be allocated on a pro rata, time-on-the-risk basis across all insured and insurable periods triggered by Mr. Rossello's injuries—i.e., 1974 to 1985. The court explained:
The instructions of Lloyd and Utica are properly applied in this case. Coverage under the Zurich CGL policy was first triggered by [Mr. Rossello's] exposure and inhalation of asbestos in 1974, as the jury found on the evidence at trial. The medical evidence at trial established in the circumstances of the case, that the occurrence of [Mr. Rossello's] bodily injury continued at least until manifestation of [Mr. Rossello's] mesothelioma and diagnosis in 2013. Consequent damages are allocable to the entire period of continuing bodily injury as insurable risk. However, such insurance was not available after 1985, and allocation of damages should extend through insured and insurable policy periods. Sums payable by Zurich will be allocated to the actual policy periods, while Mitchell remains responsible for allocations to insurable periods for which Mitchell elected not to secure coverage.
A question of fact remained as to the reasonable commercial availability of CGL or excess coverage for any period from 1977 through 1985. At trial, Mitchell did not present any evidence that coverage was unavailable. Still, the court concluded that Zurich was liable for the pro rata portion allocable to each of its four policy periods, ordering garnishment "in the amount of $223,570.60 within the occurrence limit of the 1974" policy and "$223,570.60 for each policy year 1975, 1976, and 1977, subject to the aggregate limits for each year." The circuit court further ordered the parties to proceed to discovery, specifically ordering Zurich to supplement interrogatory answers addressing aggregate limits. Zurich answered the pending discovery, stating that its expert witness determined that the amount owed pursuant to the allocation ruling was $613,233.00. Mr. Rossello initiated further discovery concerning the factual basis and methodology of the expert opinion, but the parties agreed that such discovery would be expensive and time-consuming. Nevertheless, a question remained about the year or years in which Mr. Rossello inhaled asbestos, which would have determined how much each payment was unaggregated versus aggregated.
Mr. Rossello and Zurich then jointly moved for entry of judgment pursuant to Maryland Rules 2-602(b) and 2-501(f),7 arguing that there was no just reason to delay entryof the final judgment. In the motion, the parties agreed that Zurich owed Mr. Rossello at least...
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