Insurance firms win appeal $10.6 million judgment is reversed

1994 fine was for refusing city asbestos information

August 02, 1996|By Dennis O'Brien | Dennis O'Brien,SUN STAFF

The Court of Appeals reversed a $10.6 million judgment awarded the city of Baltimore yesterday, ruling that the asbestos insurance firms fined for failing to turn over court-ordered information had legitimate grounds to withhold it.

The state's highest court said Judge Joseph I. Pines, a retired Baltimore Circuit judge assigned to asbestos litigation, was wrong when he entered a judgment in 1994 against the North River Insurance Co. of Parsippany, N.J., and U.S. Fire Insurance Co. of New York for failing to comply with pretrial discovery orders.

The appeals court said the insurance firms had legitimate concerns about turning over details of their policies with other customers and that Pines failed to address those concerns before slapping them with the fine -- believed to be the highest pretrial discovery penalty ever in Maryland.

"The court abused its discretion in entering what we will consider to be an order to produce documents to the city, without having addressed [insurance policy] confidentiality concerns," Judge Lawrence F. Rodowsky wrote in a 54-page ruling.

The city sued the two firms Feb. 22, 1993, to collect on a judgment against Asbestospray Corp. of Brooklyn, N.Y., which was insured by the firms and had been held liable for costs to remove asbestos it supplied for Walbrook Senior High School in Baltimore.

The insurance firms claimed that a clause in their policies with Asbestospray -- known as the pollution exclusion -- shielded them from liability, said G. Stewart Webb Jr., a lawyer for the insurance companies.

The city's lawyers did not return phone calls yesterday, but they said in court papers that the fine was deserved.

In briefs filed with the Court of Appeals, city lawyers contended the insurance company's lawyers knew they had a weak case and adopted a strategy of repeatedly refusing to provide required information, by missing court-imposed deadlines and forcing Pines to postpone the trial three times.

But Webb said the city's request for an exhaustive list of information would have involved finding and copying thousands of files in offices over the country.

Pub Date: 8/02/96

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