MARYLAND – Three alleged insurers of Tate Andale, Inc., a company that manufactured products containing asbestos and has been made defendant in related personal injury cases, disputed their coverage obligations to Tate Andale. While Hartford Accident & Indemnity Company and Zurich American Insurance Company were defending Tate Andale in the underlying suits, Pennsylvania National Mutual Casualty Insurance Company had not participated in Tate Andale’s defense. Prior to the filing of this lawsuit, Penn National filed its own declaratory judgment action against Tate Andale, requesting the court to resolve whether Penn National issued the alleged commercial liability insurance policies and what the terms of those policies were. In this later-filed case against Zurich and Penn National, Hartford sought a declaration from the court regarding which, and to what extent, each insurance company has an obligation to defend or indemnify Tate Andale.
Penn National moved to dismiss the other insurers’ claims against it for lack of subject matter jurisdiction and failure to state a claim. Penn National argued that Maryland law governed the parties’ coverage obligations to Tate Andale, and under Maryland law, insurance coverage for long-tail risks is allocated on a pro-rata time-on-the-risk basis. Because none of the insurers’ alleged periods of coverage overlapped, the insurers were not adverse to one another because none of their obligations to Tate Andale would affect the others’. The court agreed that Maryland insurance law would govern the insurers’ relative obligations, but the court nonetheless denied Penn National’s motion to dismiss, finding that the jurisdictional facts and the facts regarding the merits of the case were too closely connected to allow dismissal at this early stage in the proceedings.
The court, however, granted Penn National’s motion to stay the insurers’ lawsuit pending the resolution of Penn National’s declaratory judgment action against Tate Andale. The extent of Penn National’s coverage obligations, if any, will be determined in that suit, and thus staying the suit among the insurers would promote judicial economy. Moreover, Penn National’s separate suit was well underway, and the suit among the insurers was just beginning. Thus, the court opted to stay the suit among the insurers until Penn National’s separate coverage action against Tate Andale is resolved.
Read the case decision here.