General-liability insurers could enforce their policy limits as to completed-operations and products hazard claims against the insured stemming from decades-old asbestos exposure.
This insurance-coverage dispute involves the applicability of two insurers’ policies to past, pending, and future asbestos-related bodily injury claims against the insured, Appellant The Walter E. Campbell Company.
For decades, the Company – a now-defunct Maryland corporation – handled, sold, installed, disturbed, and removed insulation materials containing asbestos. By 1972, the Company had ceased the sale and use of asbestos-containing products. Nevertheless, since the mid-1980s, numerous individuals have sued the Company alleging asbestos-related bodily injury stemming from the Company’s operations.
Through 1985, the Company purchased and maintained comprehensive general liability insurance policies from several insurers, including St. Paul Fire & Marine Insurance Co. and U.S. Fire Insurance Co. Pursuant to those policies, these and other Insurers defended and indemnified the Company against hundreds of asbestos-related bodily injury claims, paying claimants more than $60 million on the Company’s behalf over several decades. However, though many claims remain pending, the Insurers now contend that they are no longer obligated to defend and indemnify the Company, based on the aggregate liability limits set forth in their policies.
The Company’s policies all contain language to the effect that the policy “applies only to bodily injury which occurs during the policy period.” The policies further provide that the insurer “shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the insurer’s liability has been exhausted by payment of judgments or settlements.”
The policy imposes an aggregate limit on the insurer’s obligation to indemnify the Company for claims that fall within the “completed operations” and products hazards. The completed-operations hazard includes bodily injury arising out of operations, but only if the bodily injury occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the insured. The products hazard includes bodily injury arising out of the insured’s products, but only if the bodily injury occurs away from premises owned by or rented to the insured and after physical possession of such products has been relinquished to others.
The policies provide that the total liability of the insurer for all damages because of the completed-operations hazard and the products hazard shall not exceed the aggregate limit set forth in the policy. Accordingly, claims involving bodily injuries that fall under these hazards are subject to an aggregate limit. Every dollar the insurer pays out to indemnify the Company against such claims counts against the policy’s aggregate limit. Once that limit is reached, the insurer is no longer obligated to defend and indemnify the Company for completed-operations and products hazard claims. On the other hand, operations claims – that is, bodily injury claims that do not constitute completed-operations or products hazards – are subject only to a “per occurrence” limit.
In 2003, the Insurers notified the Company that the aggregate limits were exhausted and that, as a result, the Insurers were no longer obligated to defend or indemnify the Company under these policies. They continued to defend the Company under their umbrella/excess policies until U.S. Fire stopped doing so in January 2009, after notifying the Company that it had fully exhausted the aggregate limits contained in its umbrella/excess policies, and St. Paul stopped in June 2013 after doing the same. The Company never challenged the Insurers’ assertion until this lawsuit.
In 2012, one of the Company’s other insurers brought a declaratory judgment action seeking a judicial declaration that it had fulfilled all of its obligations to the Company and thus was no longer liable to defend or indemnify it for pending or future bodily injury claims. Other insurers filed answers asserting counterclaims and cross-claims. The Company subsequently settled with all of its insurers except St. Paul and U.S. Fire.
The district court ultimately granted summary judgment to the Insurers. This appeal followed.
The Company’s argument amounts to an attempt to re-litigate this court’s holding in Wallace & Gale, stating that “the insurers who issued general liability policies to Wallace & Gale for time periods wholly after Wallace & Gale completed its asbestos installation work will only be liable to the extent of the aggregate limit contained in the policy.” The Company argues that Wallace & Gale doesn’t control because the opinion’s analysis “isn’t so clear.” But that position runs contrary to the Company’s strategy throughout this litigation, which has been to seek to move these proceedings to other jurisdictions so as to avoid that holding.
In any event, the court has little difficulty determining that Wallace & Gale does control, and there is no reason to depart from its unambiguous interpretation of the completed-operations hazard. Accordingly, the district court correctly declared that any bodily injury claim based on an injury that occurred during a Company operations completed prior to the start of a policy falls within the completed-operations hazard of that policy.
The Company argues that, contrary to the district court’s view, it doesn’t bear the burden of proving that a bodily injury claim falls outside the products and completed-operations hazards, but the Company failed to preserve this argument on appeal.
The Insurers asked the district court to declare that: “To avoid the application of the aggregate limit of any particular policy, [the Company] bears the burden of proving that the bodily injury that occurred during that policy’s policy period arose from asbestos exposure during a [Company] operation that was ongoing during such policy period.” In support of their position, the Insurers relied extensively on Nat’l Union Fire Ins. Co. of Pittsburgh v. Porter Hayden Co. (D. Md. Mar. 6, 2012), which held that the insured had the burden of showing when the operations hazard applies to a claim.
In opposing the Insurer’s motion, the Company didn’t challenge the proposed declaration or the Insurers’ assertion that Porter Hayden was controlling. Instead, the Company sought to shift the focus to an issue not raised in the motion: Whether the Insurers bear the burden of proving that the aggregate limits of the policies in question have actually been exhausted. But the burden to prove the applicability of an aggregate limit is separate and distinct from the burden to prove the exhaustion of such limit. Because the Company failed to challenge the propriety of the Insurers’ requested declaration in the proceedings below, it may not do so now.
The undisputed evidence in the record establishes that St. Paul properly classified the claims at issue as completed-operations claims. The Company maintains that the actual date it ceased asbestos-related operations is irrelevant in determining whether a claim asserted against it is a completed-operations claim. In particular, the Company contends that a claimant may allege that he or she first suffered an asbestos-related bodily injury during a Company operation that took place after 1972, and if the insurer decides to settle, any payout to that claimant should be classified as a payout for an operations claim, not a completed-operations claim. But the Company has failed to put forward any competent evidence suggesting that St. Paul settled any claims for individual alleging asbestos exposure during post-1972 Company operations. Accordingly, the court need not decide whether an allegation of asbestos exposure during post-1972 Company operations gives rise to a completed-operations or operations claim under the terms of the policies.
The district court properly admitted St. Paul’s loss-run evidence under Federal Rule of Evidence 803(6)(A). Rule 803(6) doesn’t require that the records at issue be created by the business having custody of them. And a qualified witness need not have personally participated in the creation of the document, nor know who actually recorded the information. Rather, the qualified witness must be able to testify that the record was kept in the course of a regularly conducted business activity and also that it was a regular practice of that business activity to make the record.
The district court found that, since January 2008, Muse oversaw and managed the handling of claims against the Company and the supervision of the individual who has been the primary claims handler on the Company’s account since the late 1990s. And Muse also testified that she was familiar with the process and procedures by which the payment records for St. Paul’s loss runs were created and maintained. Accordingly, the district court did not abuse its discretion in deeming Muse a qualified witness under Rule 803(6).
Further, the Company’s argument that the loss runs are not “verifiably contemporaneous” records of payments St. Paul made on the Company’s behalf is meritless. Muse averred that the information reflected in the loss runs were recorded by a person with knowledge of the information at or near the time of the payments reflected therein and that the information was maintained during the regular and ordinary course of business. That the loss runs were printed out front Travelers’ database for purposes of this litigation does not impact the admissibility of the loss runs, because evidence that has been compiled from a computer database is also admissible as a business record, provided it meets the criteria of Rule 803(6).
Accordingly, the district court did not abuse its discretion in admitting St. Paul’s loss runs and concluding that it had exhausted the aggregate limits of its policies.
The Company’s breach-of-contract claims are subject to Maryland’s three-year statute of limitations. Maryland courts abide by the discovery rule, which provides that a cause of action accrues when a plaintiff in fact knows or reasonably should know of the wrong.
Here, the district court concluded that the statute of limitations began to run when the Insurers informed the Company that the aggregate limits of their policies had been exhausted. This analysis was based on the Company’s allegations that the Insurers breached their obligations under their policies by improperly allocating settled operations claims as settled completed-operations claims. The Company was aware of the way in which the Insurers were classifying the claims they paid on the Company’s behalf since at least 2003 (with respect to the primary policies issued to the company) and 2009 (with respect to U.S. Fire’s umbrella policies). Accordingly, the district court’s correctly concluded that most of the Company’s breach-of-contract claims are time-barred.
The Walter E. Campbell Co. v. U.S. Fire Ins. Co. (Lawyers Weekly No. 001-062-18, 25 pp.) (Wynn, J.) No. 17-1585; Mar. 26, 2018; DMD at Baltimore (Nickerson, J.) Bryan Michael Killian for Appellant; Harry Lee for Appellees. 4th Cir.