ANNAPOLIS -- Maryland Casualty Co. officials figured they were free and clear. Their policy covering a Baltimore mechanical contracting firm now being sued by asbestosis victims had expired years ago.
But the state Court of Appeals reshaped their thinking a bit yesterday. The company must pay legal fees to defend Lloyd E. Mitchell Inc., in each of the 3,000 asbestos cases filed against it and must pay any judgments against the firm, within policy limits, Maryland's highest court ruled.
The "bodily injury" that plaintiffs cited in their suits occurred while Maryland Casualty's policies were in effect, even if the disease resulting from those injuries didn't surface for more than a decade, the unanimous court held.
The decision is good news for asbestosis victims, said Jay Morstein, Mitchell's lawyer, because it means they have some hope of recovering money, even if the firms they are suing have gone out of business.
But neither he nor E. Charles Dann Jr., Maryland Casualty's lawyer, could say what the financial effect would be on insurance carriers throughout Maryland.
Lloyd E. Mitchell Inc., which sold, distributed and installed products that contained asbestos for about 20 years, let its insurance policies with Maryland Casualty expire in the mid-1970s when it stopped doing business.
But in the mid-1980s, the company, which still has a valid corporate charter, was named as a defendant in scores of personal injury suits resulting from exposure to asbestos.
Mitchell demanded that Maryland Casualty provide a defense to the lawsuits and cover any judgments against the firm. But in December 1988, Maryland Casualty asked the Harford County Circuit Court to rule that it had no obligation to defend the mechanical contractor.
Because all the injuries that spawned the suits -- damage to the lungs from breathing asbestos fibers -- were discovered after the policies were terminated, the company contended that it had no duty to defend Mitchell or cover its losses. Harford Administrative Judge William O. Carr agreed, and Mitchell appealed.
The Court of Appeals, leaning heavily on a 1987 Illinois case and several federal cases, found that Judge Carr erred in finding that only the manifestation of the disease could trigger insurance coverage.