Estate of Adams v. Cont'l Ins. Co.

233 Md.App. 1

161 A.3d 70

ESTATE OF Harold L. ADAMS, et al.

v.CONTINENTAL INSURANCE COMPANY, et al.

No. 1065, Sept. Term, 2014

Court of Special Appeals of Maryland.

June 1, 2017

Argued by: Arnold M. Weiner (Barry L. Gogel, Michael D. Berman, Rifkin, Weiner, Livingston, Levitan & Silver, LLC, H. Russell Smouse, Law Office of Peter G. Angelos, Baltimore, MD), John Amato, IV (Goodman, Meagher & Enoch, LLP, Andrew H. Baida, Rosenberg Martin, Greenberg, LLP, Baltimore, MD), on the briefs, for Appellant.

Argued by: James P. Ruggeri (Shipman & Goodwin LLP, Washington, D.C., Robert L. Hoegle, Mary S. Diemer, Nelson, Mullins, Riley & Scarborough LLP, Washington, D.C., Neil E. Duke, Ober, Kaler LLP, Baltimore, MD), Harry Lee (Catherine D. Cockerham, Steptoe & Johnson, LLP, Washington, D.C., Andrew Janquitto, Mudd, Harrison & Burch, LLP, Towson, MD), the briefs, for Appellee.

Panel: Kehoe, Beachley, James A. Kenney, III (Senior Judge, Specially Assigned), JJ.^*

Beachley, J.

In this opinion, we attempt to finally resolve asbestos-related litigation stemming from complaints filed in the Circuit Court for Baltimore City more than twenty years ago. Appellants consist of plaintiffs represented by three different groups of law firms: 1) the Law Offices of Peter Angelos ("LOPA plaintiffs" or "LOPA"); 2) Goodman, Meagher & Enoch, LLP and Clifford Cuniff; Ashcraft & Gerel ("GME/Cuniff/A & G Plaintiffs"); and 3) Skeen, Goldman, LLP ("Goldman Plaintiffs").¹

Appellants were plaintiffs in asbestos-related litigation against MCIC Inc. (formerly McCormick Asbestos Company, "MCIC"). In a lawsuit filed in the Circuit Court for Baltimore City on May 20, 2005, appellants sought, for the second time, additional insurance coverage and proceeds pursuant to a 1994 settlement agreement with appellees, MCIC and its insurers: United States Fidelity and Guaranty Company ("USF & G"); Royal Insurance Company ("Royal");² Liberty Mutual Insurance Company; Continental Insurance Company ("Continental");³ and Hartford Accident and Indemnity Company ("Hartford"). Appellants brought claims against appellees for negligent misrepresentation, fraudulent misrepresentation, and fraud by concealment. Specifically, appellants claim that the appellees fraudulently obtained the settlement by intentionally misrepresenting the extent of MCIC's available insurance coverage, and that the appellees knew that their misrepresentations regarding the available coverage were false.

In August 2012, appellees filed motions for summary judgment, arguing that appellants' claims were time-barred pursuant to the three-year statute of limitations in Maryland Code (1973, 2013 Repl. Vol.) § 5–101 of the Courts and Judicial Proceedings Article ("CJP").⁴ Appellees argued, inter alia , that appellants were on inquiry notice of their claims as early as 1997 or 1998, shortly after this Court published its opinion in Commercial Union Ins. Co. v. Porter Hayden Co. , 116 Md.App. 605, 698 A.2d 1167 (1997), cert. denied , 348 Md. 205, 703 A.2d 147 (1997).

On November 20, 2012, the circuit court dismissed appellants' claims on the basis that they were time-barred. Appellants present several questions for our review,⁵ which we have rephrased as follows:

1. Did the circuit court err in finding that, as a matter of law, the appellants' claims were barred by the statute of limitations because appellants were on inquiry notice of the misrepresentations as early as 1997?

2. Did the circuit court err in granting summary judgment without permitting appellants to conduct additional discovery?

We answer the first question in the negative, and need not decide the second. Accordingly, we affirm the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants Litigate Abate I while MCIC and Its Insurers Pursue Settlement

MCIC, which was founded in 1934, sold and installed asbestos insulation products. By the early 1970s, it was clear that asbestos was hazardous, and MCIC ceased selling and installing asbestos-containing products in approximately 1973.

In the late 1980s, several law firms, including those representing appellants, collectively filed several thousand lawsuits against MCIC asserting personal injury claims resulting from exposure to asbestos-containing products. In April 1990, the cases of 8,555 plaintiffs were consolidated for trial ("Abate I ").

While the Abate I lawsuit was pending, MCIC and its insurers pursued settlement of the lawsuits against MCIC. On February 14, 1992, MCIC's attorney, John Nagle III, Esq. ("Nagle"), wrote a letter to LOPA attorney Thomas Friedman, Esq. ("Friedman"), with an attached schedule of all available insurance policies sold to MCIC. The schedule contained a note claiming that the list was prepared by USF & G on behalf of MCIC, and the information provided was "based primarily on secondary evidence of coverage." The schedule also contained two columns under the heading "products coverage," one listing "per person limit[s]," and the other listing "per occurrence limit[s]." Framing the settlement discussion in terms of available "products coverage" had, as we will explain, a significant impact on the amount of coverage appellants received in settlement, as well as on the eventual causes of action in this case.

On February 27, 1992, Friedman responded, submitting a total demand of $19,527,900. Mr. Friedman concluded his letter saying:

From the insurance information you supplied, it appears that your client may, in a best case scenario, not have sufficient insurance coverage to satisfy our demand. Under these circumstances, we are prepared to recommend in settlement of all our claims the total amount of your insurance coverage. It is imperative, therefore, that you determine as expeditiously as possible the exact amount of insurance coverage and that our tender is submitted to your principal.⁶

(Emphasis added). Notably, Friedman recommended seeking all available coverage, and not just "products coverage."

On July 8, 1992, the jury found MCIC strictly liable for asbestos-related injuries suffered by foreseeable users and foreseeable bystanders.⁷ Settlement discussions pertaining to damages ensued, with counsel for MCIC repeatedly stating that there were "limited assets available to MCIC," and that bankruptcy proceedings or a settlement with another claimant could likely impact the amount appellants could recover.

On December 7, 1992, Nagle sent a letter to Friedman enclosing a revised schedule of insurance (dated November 6, 1992) that was, in most respects, identical to the earlier version. The schedule identified the "per person" and "per occurrence" limits as "products coverage." Nagle indicated that he was providing the information "as it [was] related to [him] by USF & G," noting that "no physical copies of policies of insurance exist with respect to coverage provided to MCIC by its various insurers over the decades," and explaining that "the policies were disposed of prior to the time when MCIC was first named as a defendant," and "[a]ll reasonable efforts have been made to locate such policies."

The 1994 Settlement Agreement

On September 14, 1993, Baltimore City Circuit Court Administrative Judge Joseph H.H. Kaplan held a conference to discuss settlement. Nagle had requested the conference so that MCIC could propose to pay approximately $13 million, all of MCIC's remaining insurance coverage, to settle all of the cases pending against MCIC. At the conference, appellants' attorneys requested all of the policies that the insurers had ever issued to MCIC, but counsel for the insurers claimed that the policies could not be produced for review. Nagle insisted that the approximately $13 million offer represented MCIC's remaining insurance assets. Appellants' counsel insisted on reviewing the policies before accepting any settlement, and Judge Kaplan instructed the insurers to provide whatever policy documents they possessed in anticipation of future settlement discussions.

The Nagle Documents

On October 15, 1993, Nagle sent a letter to appellants' counsel with "insurance coverage documents" attached, which he indicated were "recently provided to [him] by the respective carriers of MCIC, Inc."⁸ We shall refer to these documents as the "Nagle Documents." The letter stated that Royal had not yet provided him with policy information, but that he would deliver those documents once he received them. The letter also included two tables which summarized the "limits of each carrier and MCIC (exclusive of Royal)." The letter concluded that the total amount of coverage available was $12,300,000.00 with $11,877,054.90 remaining.⁹

Royal, unable to locate a copy of any insurance policy it sold to MCIC, wrote a letter to Nagle on October 21, 1993, conceding that, although it could not locate them, it had, in fact, issued insurance policies to MCIC. Royal provided a schedule that listed the policies it issued to MCIC and concluded that the total amount of coverage it provided to MCIC was $1,200,000 based on the "Bodily Injury Limits" of $25,000/50,000 for the first two years and $50,000/100,000 for the remaining 11 years.¹⁰ Royal reiterated that it did not possess any copies of actual policies, and therefore it claimed that the information it provided was "extremely sketchy." Nagle forwarded Royal's letter to appellants' counsel on October 21, 1993.

Contents of the Nagle Documents—Types of Coverage and Limits of Coverage

The Nagle Documents included Declaration sheets¹¹ for the available policies, which were standard Comprehensive General Liability ("CGL") policies. The Declaration sheets themselves distinguished the available limits of liability. For example, the USF & G Declaration sheet provided maximum limits to the insured for bodily injury in the following ways: $300,000 each occurrence; and $300,000 in the aggregate. The section titled "Limits of Liability" provides, in pertinent part:

The total liability of the Company for all damages ... because of bodily injury sustained by one or

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