On April 3, 2020, Maryland's highest court, the Court of Appeals, affirmed a ruling by the Circuit Court for Baltimore City in favor of Goodell DeVries's client, Zurich American Insurance Co. See Rossello v. Zurich Am. Ins. Co., No. 24, Sept. Term, 2019 (Md. Apr. 3, 2020). Under this ruling, the insurer's obligation to cover an asbestos-related judgment was limited to a fraction of the entire judgment, pro-rated in proportion to the time its policies were in effect.
In 2016, the claimant, Patrick Rossello, who had been exposed to asbestos in 1974 and developed mesothelioma in 2013, obtained a jury award for $2.7 million against contractor Lloyd E. Mitchell, Inc. He sought to garnish this amount against the proceeds of insurance covering Mitchell from 1974 to 1977, issued by Zurich's predecessor, Maryland Casualty Co.
Zurich, which was represented in the trial court by two Goodell DeVries partners, the late Chuck Dann and Kamil Ismail, argued that Zurich was only liable for less than one-third of the judgment, accounting for four out of the 12 years after Mr. Rossello's exposure during which insurance was available to Mitchell, and further reduced to the remaining available limits in those four years after prior amounts paid under the policies. The trial court agreed, and held that Zurich was liable for no more than $894,282, and potentially as little as $613,233, depending on the prior exhaustion of limits.
After bypassing Maryland's intermediate appellate court to take direct review of the appeal, the Maryland high court held that pro rata allocation was appropriate in cases involving coverage for bodily injuries that span multiple years. In so doing, the court adopted the holding of the intermediate appellate court in Mayor and City Council of Baltimore v. Utica Mutual Ins. Co., 145 Md. App. 256 (2002), where Zurich, represented by Goodell partner Linda S. Woolf, was among several insurers who successfully urged application of pro rata allocation to coverage for asbestos property damage. In the intervening years since 2002, that ruling had also been adopted by several other state and federal courts.
The Rossello court extended the intermediate court's Utica holding to cases involving personal injury and adopted it as the controlling law in Maryland. It thus unanimously affirmed the trial court's ruling in favor of Zurich, which was represented at the appellate level by Harry Lee and Catherine Cockerham of Steptoe & Johnson LLP, along with Mr. Ismail. (Mr. Dann passed away in 2018.) The court concluded that this "pro rata" approach was not only consistent with the terms of standard liability policies but had also become the majority rule across the nation.
Previously, insurance claims handlers and policyholders may have been uncertain about the extent to which the Utica holding applied, including whether it applied to claims involving bodily injury and whether it would be adopted or rejected by the Court of Appeals. The new ruling by Maryland's highest court brings welcomed predictability and ease-of-application to the interpretation of CGL policies in the context of continuous or progressive, long-tail injuries, in a manner that is consistent with the policy language under Maryland law.
The case was reported by Law360. See "Zurich Not Liable For Full $2.7M Asbestos Award In Md."