Appellate Court of Maryland applies equitable contribution principles to preserve non-settling insurers potential right to contribution against settling insurers.

 

Selective Way Insurance Company  v. Fireman’s Fund Insurance Company, et. al.

            On February 2, 2023, the Appellate Court of Maryland issued its opinion in Selective Way Insurance Company v. Fireman’s Fund Insurance Company, et. al. The opinion primarily analyzed the doctrine of equitable contribution, particularly as it pertains to liability insurers with a mutual obligation to the same insured.

            The original dispute arose from a Baltimore County apartment complex construction project gone awry. In 2006, a subsequent purchaser of the complex sued the general contractor, “Questar.” Questar was insured with Nationwide and was an additional insured on various liability policies held by Questar’s subcontractors. Nationwide defended Questar in the underlying suit while also requesting defense and indemnification from the subcontractors’ insurers.  The underlying suit against Questar was settled in 2009, however, not before Questar incurred approximately one million dollars in attorneys’ fees and other costs.

            Nationwide brought a declaratory judgment action in Baltimore County Circuit Court against the various subcontractors and their insurers alleging that they breached a contractual duty to defend Questar in the underlying construction suit.  Nationwide eventually reached settlement agreements with all but one of the other insurers: Selective Way. The settlement agreements included substantially the same provisions requiring the settling insurers to waive claims for contribution or indemnity against the other insurers. In 2017, Nationwide’s case against Selective Way (the sole non-settling insurer) proceeded to a jury trial after which the jury determined that Nationwide proved damages in the amount of: $994,719.54.

            In March of 2020, Selective Way filed an action in Baltimore County Circuit Court seeking contribution, restitution, and subrogation from the various settling insurers. In June of 2021, the Circuit Court disposed of Selective Way’s claims by dismissing and/or granting summary judgement in favor of the defendant-insurers. The court ruled that Selective Way failed to assert a cross claim against the settling insurers in the action by Nationwide. Upon settlement with Nationwide, the court reasoned that there was no longer a “common liability” between Selective Way and the settling insurers and, absent a common liability, there was no right of contribution.

            On Appeal, the Appellate Court of Maryland overturned the ruling against Selective Way on the contribution claims. The Appellate Court took issue with the trial court’s reliance on Selective Way’s failure to assert cross claims against the other insurers in the action by Nationwide, noting that cross claims are not mandatory and need not be brought in an original action.  Additionally, the Appellate Court analyzed authority from other states to determine that insurer who pays “more than its fair share” may have a right of contribution from another insurer that was obligated to cover the same loss. The Appellate Court referenced Maryland Cas. Co. v. W.R. Grace & Co., 218 F.3d 204, 210 (2d Cir. 2000) for the proposition that “a settlement agreement that absolves an insurer of its contractual obligations to the insured does not extinguish the rights of other insurers to receive equitable contribution from the settling insurer.” The Appellate Court ultimately remanded the case back to the Circuit Court for further action, particularly on the viability of Selective Way’s contribution claim against the settling insurers. 

 

 Joseph Kavanagh, Associate

 

Appellate Court of Maryland Affirms Summary Judgment Denying Negligence Claim Stemming from Gun Violence in the Workplace

On September 20, 2018, Snochia Moseley opened fire on several employees at a Rite Aid Distribution Center in Aberdeen, Maryland, killing three and wounding three more. Prior to her deadly attack, Moseley was employed by Abacus Corporation and assigned to temporarily work in Rite Aid’s warehouse facility. The injured employees, known as “The Mitchells,” were employed by Capstone Logistics who contracted with Rite Aid to unload trucks at the facility.

The Mitchells filed suit against both Abacus Corporation and Rite Aid, alleging that they suffered damages proximately caused by the companies’ negligent failure to provide adequate security at the facility and negligent hiring and supervision of Moseley. Rite Aid argued that the Mitchells’ tort claims were barred because they were temporary employees under Rite Aid’s control and thus, Rite Aid was entitled to workers’ compensation immunity under Section 9-509 of the Maryland Workers’ Compensation Act. Baltimore County Circuit Court granted summary judgment in favor of Abacus and Rite Aid, finding that the Mitchells failed to present evidence that would establish Abacus was negligent in hiring Moseley or that Rite Aid should have foreseen the shooting such that adequate security would have been provided. Additionally, the circuit court found that the Mitchells were temporary employees of Rite Aid, meaning Rite Aid was immunized from their tort claims.

The Mitchells appealed to the Appellate Court of Maryland, which has since issued an opinion affirming the circuit court’s judgment in part, and reversing the issue of Rite Aid’s immunity.  Earlier this month, the appellate court affirmed the circuit court’s granting of Rite Aid’s motion for summary judgment, finding that Rite Aid was not liable for the mass shooting. The court reasoned that the Mitchells did not show that the mass shooting could have been foreseen or that inadequate security was provided. There was no evidence offered that would indicate Moseley posed a threat of violence or that any events preceding the shooting would give rise to such a violent attack.

 However, the appellate court found that the circuit court erred in finding that the Mitchells were temporary employees of Rite Aid. In determining who the Mitchells were employed by, the court considered which company had the power to select and hire the employee, the payment of wages, the power to discharge, the power to control the employee’s conduct, and whether the work was part of the regular business of the employer. Control of the employees was the most persuasive factor, and because the drug store chain did not directly supervise the Mitchells and the contracting company Capstone was solely responsible for its own employees, the Mitchells were not employees of Rite Aid. Although the Mitchells will not be receiving settlements from Rite Aid, they will receive workers’ compensation benefits through their employer Capstone.

This opinion serves two purposes, one for employers and one for employees. The court made clear that this opinion was not to suggest that mass shootings are unforeseeable as a matter of law such that employers may escape liability. However, it sheds light on the standard of care surrounding a business owner’s duty to protect invitees from gun violence. As for employees, this case will resolve any confusion amongst employment, particularly when companies are subcontracting with each other or third-parties are intertwined.

 

Faith Zellman, Law Clerk

RSRM Welcomes Associate Fernando Kirkman!

Fernando Kirkman graduated from the University of Maryland Francis King Carey School of Law in 2017, and graduated from Towson University with a degree in Political Science in 2011. While attending law school, Mr. Kirkman interned for the Honorable Robert McDonald on the Maryland Court of Appeals, the NAACP, the Maryland Office of the Attorney General, and the U.S. Attorney’s Office for the District of Maryland. Mr. Kirkman also was a member of the Moot Court Board and the Alternative Dispute Resolution Team

Immediately following law school, Fernando was a judicial law clerk for the Honorable Alexander Wright Judge on the Maryland Court of Special Appeals and the Honorable Irene Berger, U.S. District Court Judge for the Southern District of West Virginia.

Outside of the office, Mr. Kirkman enjoys travel, spending time with family and friends, and cheering on the Baltimore Ravens. Mr. Kirkman was born and raised in Baltimore City and frequently volunteers in the community.

Appellate Court of Maryland applies the recently adopted Daubert/Stevenson standard to overturn the exclusion of expert testimony

 

Parkway Neuroscience and Spine Institute, LLC v. Katz, Absoch, Windesheim, Gershman & Freedman, P.A., et al., No. 658, September Term, 2021, Opinion by Adkins, J.

                On September 30, 2022, the Appellate Court of Maryland overturned the Howard County Circuit Court’s decision to strike the testimony of a “lost profits” expert. Parkway Neuroscience and Spine Institute (“PSNI”) brought a professional malpractice suit against its prior accounting firm: Katz, Abosch, Windesheim, Gershman & Freedman, P.A. (“Katz Abosch”). In essence, PNSI claimed to Katz Abosch’s proposed compensation model plunged PNSI “deeply in debt,” causing several members to leave the practice and further causing a significant loss in earnings. PNSI retained a certified public accountant (CPA) as a damages expert on the issue of lost profits.

                The case was initiated in 2018, when Maryland still employed the Frye-Reed standard to govern the admissibility of expert testimony. The Frye-Reed standard largely considered whether an expert’s opinion was “generally accepted” within the scientific community. See Reed v. State, 283 Md. 374, 381 (1978) (quoting Frye v. U.S., 293 F. 1013, 1014 (D.C. Cir. 1923)). While PNSI’s case was pending, the Supreme Court of Maryland abandoned Frye-Reed as the controlling standard in favor of Daubert. See Rochkind v. Stevenson (Stevenson II), 471 Md. 1, 35–36 (2020). The Stevenson II court recognized that “Daubert . . . refocuses the attention away from acceptance of a given methodology—although that is not totally removed from the calculus—and centers on the reliability of the methodology used to reach a particular result.” Id. at 31; Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589–90 (1993).

                Based on the substantive change in the in the law, Katz Abosch renewed their motion to strike PSNI’s CPA expert. After a hearing, the trial granted the motion and excluded the testimony of the CPA, taking issue with the CPA’s lack of experience in evaluating the finances of medical practices, her methodology in using a “before and after” method to calculate lost profits, her reliance on “subjective” decisions, and her selection of 2015 as the year from which to base her opinions.

                On appeal, the Appellate Court disapproved of the trial court’s decision to exclude the CPA’s testimony based on her lack of experience with medical practices such as PSNI. The appellate court considered it “an abuse of discretion to exclude testimony simply because the trial court does not deem the proposed expert to be the best qualified or because the proposed expert does not have the specialization that the court considers most appropriate.” See also Holbrook v. Lykes Bros. S.S. Co., Inc., 80 F.3d 777, 782 (3d Cir. 1996) (citation omitted). The Appellate Court also found fault in the trial court’s decision to exclude the testimony over what the trial court considered an unreliable methodology.  Though the trial court questioned whether the expert’s chosen methodology (the “before and after” method) was the best method to calculate lost profits, this method was nevertheless an “indisputably legitimate choice of methodology.”

                Ultimately, the Appellate Court acknowledged that the issues raised with the expert’s qualifications and methodology go to the weight of her testimony, not necessarily its admissibility. The Appellate Court formally reversed the trial court’s decision to exclude the lost profits expert and remanded the case to the trial court. While this case is somewhat specific to CPA related experts, it provides a helpful framework for practitioners applying Maryland’s new Daubert/Stevenson standard to evaluate the admissibility of expert testimony.

Maryland Court of Appeals Prevents an Injured Firefighter from Double Dipping

Spevak v. Montgomery Cnty., 2022 Md. LEXIS 323.

        Recently, the Maryland Court of Appeals issued an unreported opinion that clarified the standard necessary to apply the offset provision contained in Md. Code Ann., Lab. & Empl. § 9-610.  The offset provision was designed to preclude duplicative recovery for the same injury, essentially preventing double-dipping into the same pot of comparable benefits.  This provision does not however hinder a claimant from receiving workers’ compensation benefits that are owed.  Instead, it is a means of regulating the terms of compensation for injury.

        The case before the Court of Appeals involved a firefighter who, after serving nearly three decades, went into retirement due to a service-related back injury.  Upon his retirement, Mr. Spevak began collecting $1,859.07 per week in service-connected total disability retirement benefits.  Nine years into retirement, Mr. Spevak suffered hearing loss related to his employment from exposure to loud noises, such as fire engines, sirens, and alarms.  Due to this hearing loss, Mr. Spevak filed an additional workers’ compensation claim to which the County objected.  The County argued that Mr. Spevak’s compensation for his hearing loss should be offset because he was already receiving service-connected total disability retirement benefits due to his back injury, which compensated him for wage loss. The County further noted that a failure to apply the offset would result in duplicative recovery for the same loss and Mr. Spevak would collect more than the maximum compensation available. Such compensation would be contrary to the legislative intent and workers’ compensation law.  Mr. Spevak countered arguing that prior case law identifies a “same injury” test, and if applied, compensation for hearing loss should not be offset because the back injury arose nine years prior to the occupational hearing loss. If the “same injury” test would not be satisfied, then Mr. Spevak’s compensation would not be subject to any offset.  

        The sole issue, in this case, was whether Mr. Spevak’s benefits were “similar benefits” under LE § 9-610. To address this question, the Court looked to the plain language of LE § 9-610(a) and prior case law and concluded that the “same injury” standard is the proper test to identify whether benefits are subject to an offset under LE § 9-610. The Court ultimately held for the County, stating that the benefits Mr. Spevak was receiving for his back injury fully compensate him for all injuries related to his service as a firefighter. Other service-connected benefits would therefore be duplicative under the workers’ compensation system.

        Following this case, it becomes apparent that in the event an individual suffers more than one occupational injury, benefits may be “similar” and subject to the offset even if injuries develop on different body parts and/or there is a significant gap of time from which the injuries developed. The focus and application of the provision appear to fall on the type of benefit received, rather than the type of injuries suffered.

                -- Faith Zellman, Law Clerk

            

Maryland’s Intermediate Appellate Court Expands Scope of Personal Safety Exception

 

David P. Bogert, et al. v. Thomas A. Thompson, Jr., et al., No. 1171, Sept. Term, 2021.

    Under most circumstances, a plaintiff cannot recover for pain and suffering when the damage caused by a defendant’s negligence is limited to property only. A person seeking to recover for emotional pain in tort usually must also show an accompanying bodily injury. However, in a recent case Maryland’s Court of Special Appeals (“COSA”) expanded the scope of one exception to this general rule.

    At issue in Bogert v. Thompson was the application of the personal safety exception. Under this rule, there may be recovery when the defendant’s negligence causes property damage that results in emotional injuries that are due to the plaintiff’s reasonable fear for the safety of himself or for the members of his family.

    The facts of the case are as follows: On September 22, 2019, during the early morning hours Thomas A. Thompson, Jr. crashed his truck into the house where David P. Bogert and his family resided. Mr. Thompson was driving under the influence of alcohol, lost control of his truck, and crashed it through the Bogerts’ garage. Directly above the garage were the bedrooms of Mr. Bogert’s minor children. At the time, everyone was asleep but were immediately awakened by the sound of the truck’s impact. The noise caused Mr. Bogert to experience a flashback to an incident in 2005 while he was serving in Iraq. As a result, Mr. Bogert immediately believed his house was under attack and he rushed to his children’s bedrooms.

    Counsel for the Defendant, Mr. Thompson, moved for summary judgment and argued that, since the only damage caused by the Defendant was to the Bogerts’ property (which occurred while the Bogerts were sleeping), there could be no recovery for emotional injuries. To support this position, the defense distinguished the current case with the facts of Bowman v. Williams, 164 Md. 397 (1933), which allowed the plaintiff to recover for mental injuries after he witnessed a truck collide into the side of his house nearby his children’s bedroom. In Bowman, the plaintiff actually witnessed the negligent damage to his property while in the current case the Bogerts did not. The circuit court agreed that Bowman was distinguishable and granted summary judgment.

    On appeal, counsel for the Bogerts argued that the personal safety exception was applicable because Mr. Bogert was placed in reasonable fear for the safety of his children due to Mr. Thompson’s negligence, and this fear caused Mr. Bogert to incur measurable emotional injuries. In response, counsel for the Defendant argued that the cases applying the personal safety exception all involve situations where the plaintiff witnessed the accident giving rise to their mental injury. As such, observing the act of negligence is necessary before the exception will apply.

    In rejecting this contention, the COSA stated that a tortious act damaging a plaintiff’s property and causes what sounds like a loud explosion would likely cause a plaintiff to be just as afraid for his safety and the safety of his family if he hears the explosion, but does not see what caused it, as a plaintiff who sees the cause by witnessing the negligent act unfold. Therefore, when applying the personal safety exception the plaintiff need not witness the accident so long as (1) he was aware of it immediately after the accident occurred, and (2) that awareness caused the plaintiff to reasonably fear for his own safety or the safety of his family members.

             -- John Thompson, Associate

 

RSRM Congratulates its Attorneys on their Maryland State Bar Association Appointments!

 

Tara Barnes, Partner – MSBA Judicial Appointments                                                                         Committee Co-Chair

John Thompson, Associate – MSBA Young Lawyers Section Council                                                            Wellness Committee Co-Chair

Ashley Bond, Associate – MSBA Young Lawyers Section                                                                        Council Wellness Committee Co-Chair

Logan Hayes, Associate - MSBA Young Lawyers Section Council                                                         Harford / Cecil Circuit Representative