CX Reinsurance v. Johnson

CX Reinsurance Company Limited and Liberty Mutual Mid-Atlantic Insurance Company v. Devon S. Johnson, et al., No. 47, September Term, 2021. Opinion by Biran, J. INSURANCE – GENERAL LIABILITY INSURANCE POLICIES – INTENDED BENEFICIARIES – VESTING OF RIGHTS OF TORT CLAIMANTS – Petitioners are insurance companies (the “Insurers”) that issued commercial general liability policies (the “Policies”) to several Baltimore residential landlords (the “Landlords”) that included coverage for bodily injuries resulting from lead paint exposure at the Landlords’ rental properties. After allegedly discovering material misrepresentations in the Landlords’ initial policy applications, one of the Insurers filed contract rescission actions against the Landlords. Eventually, those rescission cases were settled.

Under the terms of the settlements, the coverage for lead paint-related losses was substantially reduced or, in some instances, completely eliminated. Respondents are tort claimants (the “Claimants”) who allege that they suffered bodily injuries as a result of their exposure to lead paint while residing in the Landlords’ rental properties. The Court of Appeals held that the relevant provisions of the Policies make clear that those Claimants who do not hold final judgments against the Landlords (and who have not entered into settlement agreements with the Landlords, with the Insurers’ approval) are not intended beneficiaries of the Policies. No Maryland statute, regulation, or current public policy overrides the terms of the Policies such as to make all tort claimants intended beneficiaries of general liability insurance policies.

The Claimants who did not have final judgments against their Landlords prior to the settlements of the rescission cases do not have the right to enforce the pre-settlement terms of the Policies, provided the settlements were made in good faith, rather than being collusive. Under the terms of the Policies, those Claimants who obtained final judgments before the settlements of the rescission cases became intended beneficiaries of the Policies as of the date they obtained their judgments in the trial court and, therefore, have the right to enforce the pre-settlement terms of the Policies. Circuit Court for Baltimore City IN THE COURT OF APPEALS Case No. 24-C-18-001930 Argued: April 4, 2022 OF MARYLAND No. 47 September Term, 2021 CX REINSURANCE COMPANY LIMITED AND LIBERTY MUTUAL MID-ATLANTIC INSURANCE COMPANY v. DEVON S. JOHNSON, ET AL. *Getty, C.J. Watts Hotten Booth Biran Harrell, Glenn T., Jr. (Senior Judge, Specially Assigned) McDonald, Robert N. (Senior Judge, Specially Assigned), JJ.

Opinion by Biran, J. Filed: August 29, 2022 Pursuant to Maryland Uniform Electronic Legal Materials Act *Getty, C.J., now a Senior Judge, participated in the (§§ 10-1601 et seq. of the State Government Article) this document is authentic. hearing and conference of this case while an active 2022-08-29 member of this Court. After being recalled pursuant 15:21-04:00 to Md. Const., Art. IV, § 3A, he also participated in the decision and adoption of this opinion. Suzanne C. Johnson, Clerk For many years, CX Reinsurance Company Limited and its predecessor entity (“CX”), in combination with Liberty Mutual Mid-Atlantic Insurance Company and its predecessor entity (“Liberty Mutual”), issued commercial general liability policies (the “Policies”) to several Baltimore residential landlords (the “Landlords”) that included coverage for bodily injuries resulting from lead paint exposure at the Landlords’ rental properties. After allegedly discovering material misrepresentations in the Landlords’ initial policy applications, CX filed contract rescission actions against the Landlords in 2015.

Eventually, CX and the Landlords settled the rescission cases. Under the terms of the settlements, the coverage for lead paint-related losses was substantially reduced or, in some instances, completely eliminated. CX and Liberty Mutual (collectively, the “Insurers”) are the Petitioners in this case. The Respondents are 15 tort claimants (the “Claimants”) who allege that they suffered bodily injuries as a result of their exposure to lead paint while residing in the Landlords’ rental properties.

The majority of the Claimants had not obtained final judgments against, or entered into settlements with, the Landlords before CX and the Landlords settled the rescission cases. In the Circuit Court for Baltimore City, the Claimants filed suit against the Insurers and the Landlords, seeking a declaration that: (1) the Claimants are “intended third-party beneficiaries” of the Policies; and (2) the settlements between CX and the Landlords do not modify or affect the insurance proceeds available under the Policies to indemnify the Landlords with respect to judgments obtained by the Claimants against the Landlords. The circuit court ruled that the Claimants are intended beneficiaries of the Policies and granted summary judgment in the Claimants’ favor. The Court of Special Appeals affirmed.

As discussed below, the relevant provisions of the Policies make clear that those Claimants who do not hold final judgments against the Landlords (and who have not entered into approved settlement agreements with the Landlords) are not the primary parties in interest under the Policies. No Maryland statute, regulation, or public policy recognizes tort claimants who do not hold judgments against insureds as intended beneficiaries of general liability insurance policies. That being the case, the language of the Policies controls here. To the extent the Claimants do not hold judgments against, and have not entered into approved settlement agreements with, the Landlords, they are not intended beneficiaries of the Policies.

Therefore, assuming that they eventually do obtain judgments against, or enter into settlements with, their Landlords, those Claimants will not have the right to enforce the terms of Policies as they existed prior to the rescission case settlements, provided that those settlements were the product of good-faith, non-collusive negotiations. Those Claimants who obtained final judgments against their Landlords prior to the settlements of the applicable rescission cases may enforce the pre-settlement terms of the Policies. 2 I Background As stated above, the circuit court granted the Claimants’ motion for summary judgment. In the light most favorable to the Insurers,1 the record reflects the following: A. The Policies Beginning in 1997, the Landlords submitted applications to CX to obtain commercial general liability insurance policies. The applications included Question 16, in which CX asked whether “the Insured [has] ever had any lead paint violations in the building(s)?” Each of the Landlords answered “No” to this question on the application itself or, if they left that question blank, they allegedly otherwise provided CX with a negative response to that question.

Based on these negative responses, CX issued the Policies, which included coverage relating to bodily injuries resulting from exposure to lead-based paint at the Landlords’ covered properties during the policy term. Specifically, the Policies provided that we[2] will pay those sums that the Insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” arising out of the Ingestion, Inhalation, absorption of, or exposure to lead, lead-paint or other lead-based products of any kind, form or nature whatsoever to which the insurance provided by this endorsement applies. We will have the right and duty to defend any “suit” seeking those damages. We may at our 1 See, e.g., Rossello v. Zurich Am.

Ins. Co., 468 Md. 92, 103 (2020) (when analyzing a grant of summary judgment, an appellate court “review[s] the record in the light most favorable to the nonmoving party and construe[s] any reasonable inferences that may be drawn from the facts against the moving party”) (internal quotation marks and citation omitted). In the Policies, “we” or “us” referred to the Insurers, and “you” referred to the 2 “Named Insureds” (as relevant here, the Landlords). 3 discretion investigate any “occurrence” and settle any claim or “suit” that may result. Included in the Policies was a “Schedule of Named Insureds,” identifying the first Named Insured as well as other Named Insureds and identifying the insured properties in a “Schedule of Locations.” The Policies also contained a “Changes” provision stating: This policy contains all the agreements between you and us concerning the insurance afforded.

The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy’s terms can be amended or waived only by endorsement issued by us and made a part of this policy. The Policies also included a “Cancellation” provision allowing CX or the first Named Insured to cancel the policy. Nothing in the Policies required CX or the first Named Insured to obtain the consent of any other Named Insured or any other person or entity before exercising the right of cancellation or agreeing to a change in terms.

In addition, the policies included a “Legal Action Against Us” provision, stating that: No person or organization has a right under this Coverage Part: a. To join us as a party or otherwise bring us into a “suit” asking for damages from an insured; or b. To sue us on this Coverage Part, unless all of its terms have been fully complied with. A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured obtained after an actual trial; but we will not be liable for damages that are not payable under the terms of this Coverage Part or that are in excess of the applicable limit of insurance.

An agreed settlement means a settlement and release of liability signed by us, the insured and the claimant or the claimant’s legal representative. 4 For lead paint claims, the Policies purported to cover up to $1,000,000 for any one “occurrence” and, depending on the policy, up to $1,000,000 or $2,000,000 in the aggregate. The Insurers continually renewed the Policies for more than a decade.3 B. The Change in the Legal Landscape Regarding Liability for Lead-Paint Claims In 1994, the Maryland General Assembly enacted the Reduction of Lead Risk in Housing Act, which, among other things, effectively placed a $17,000 cap on lead-related personal injury compensation by providing immunity from suit to owners of “affected properties” who made “qualified offers” of up to $17,000 to persons “at risk” of ingesting lead at the properties. H.B. 760, 1994 Leg., 408th Sess. (Md. 1994).

Based, at least in part, on this recently adopted legislation, the Insurers decided to offer their commercial general liability insurance products to the Landlords. While the Policies on paper provided for up to $1,000,000 in coverage per claim of bodily injury resulting from exposure to lead paint, the Landlords’ liability for each such claim effectively was capped at $17,000. The landscape relating to lead-paint claims changed with this Court’s 2011 decision in Jackson v. Dackman Co., 422 Md. 357 (2011). In that case, we held that the immunity provisions in the Reduction of Lead Risk in Housing Act violated Article 19 of the Maryland Declaration of Rights.

Id. at 382-83 . As a result, the Insurers’ potential exposure for lead-related personal injury claims under the Polices increased substantially. 3 Beginning in 1999, CX’s underwriting agent, Continental Coverage Corporation (“CCC”), issued the renewal policies to the Landlords on behalf of Liberty Mutual. Under a “Fronting Arrangement,” CCC made the underwriting decisions with respect to the Policies issued by Liberty Mutual, and CX was responsible for the administration and payment of covered claims. 5 C. The Rescission Actions In 2015, CX filed actions against the Landlords in the United States District Court for the District of Maryland, seeking recission of the Policies. Among other theories, CX claimed that the Landlords had made material misrepresentations in their initial applications for insurance by falsely answering Question 16 concerning prior “lead paint violations in the building(s)[.]” According to CX’s Complaints, prior to the Landlords submitting their applications, the Baltimore Department of Health had cited the Landlords and/or other Named Insureds for lead paint violations in numerous buildings included on the Policies’ Schedules of Locations.

CX further alleged that, if the Landlords had truthfully answered Question 16, CX would not have issued the Policies. Over the next several years, CX and the Landlords litigated the various rescission cases. Eventually, the parties entered into settlements to resolve CX’s claims. Six of the settlements resulted in amendments to the Policies that reduced, but did not fully eliminate, coverage; three of the agreements resulted in mutual rescission of the underlying policies altogether.

D. This Litigation In April 2018, one of the Claimants, Devon S. Johnson, filed a Complaint for Declaratory Judgment against his former Landlord and CX in the Circuit Court for Baltimore City. As the litigation progressed, more Claimants joined the action, and their former Landlords, as well as Liberty Mutual, were added as defendants. The operative complaint in the case is the Third Amended Complaint for Declaratory Judgment, which the Claimants filed in June 2019. The Claimants allege that 6 they are former residents of insured properties owned by the Landlords, and that they were damaged as a result of their exposure to lead paint existing at those properties.

They further allege that they were not parties to the agreements between CX and the Landlords that settled CX’s rescission cases, and that they did not consent to the purported modifications and rescissions of the Policies. The Claimants sought a declaration that, among other things, they are “intended third party beneficiaries” of the Policies, and that the settlements between CX and the Landlords do not operate to reduce the applicable policy limits of the Policies with respect to themselves or to “any other claimant who has vested rights” in the Policies. Of the 15 Claimants, three (Devon Johnson, Chauncey Liles, and Shyliyah Streeter) obtained judgments against their Landlords for lead paint-related injuries prior to the settlement of the applicable rescission actions between CX and the Landlords.4 The parties filed cross-motions for summary judgment. After conducting a hearing, the circuit court granted the Claimants’ motion for summary judgment and denied the Insurers’ motions for summary judgment.

The court ruled that: (1) the Claimants “are third- party beneficiaries of the Policies”; (2) the Claimants “have vested rights in the Policies as they existed before being rescinded by agreement or modified pursuant to the Rescission Settlement Agreements between [CX] and the Landlord Defendants”; and (3) the “Rescission Settlement Agreements do not affect [the Claimants’] vested rights in the 4 A fourth Claimant, Lea Gardner, obtained a final judgment against her former Landlord on January 24, 2019. The record reflects that CX and Ms. Gardner’s former Landlord settled their rescission case on or about August 16, 2016. 7 Policies, and the Rescission Settlement Agreements are ineffective as to [the Claimants]….” The Insurers appealed, and the Court of Special Appeals affirmed the judgment of the circuit court. CX Reinsurance Co. Ltd. v. Johnson, 252 Md. App. 393 (2021). The Court of Special Appeals concluded that “injured tort claimants are intended third-party beneficiaries of liability insurance policies.” Id. at 414 .

The court rejected the notion “that to be an intended third-party beneficiary of an insurance policy, the injured party must first obtain a judgment or execute a settlement agreement with a covered insured.” Id. at 415 . The intermediate appellate court further held that the Claimants “obtained vested rights in [the] Policies when they suffered their injuries.” Id. at 426 . That being the case, “the Insurers and [L]andlords could not subsequently modify [the Policies] pursuant to the Rescission Settlement Agreements.” Id. The Insurers filed a petition for writ of certiorari with this Court, which we granted.

CX Reinsurance Co. Ltd. v. Johnson, 476 Md. 583 (2021). We combine the three questions the Insurers asked us to review into one: Did the trial court properly grant summary judgment to the Claimants on the ground that they are intended beneficiaries of the Policies?5 5 The Insurers sought review of these questions: (1) Whether the [Court of Special Appeals] erred in refusing to interpret insurance policies like other contracts, concluding that “sound public policy dictates that liability insurance policies should be construed to protect injured tort claimants” notwithstanding their terms? 8 II Standard of Review Because “[t]he question of whether a trial court’s grant of summary judgment was proper is a question of law,” this Court reviews it de novo, without deference to the decisions of the lower courts. Rossello v. Zurich Am. Ins.

Co., 468 Md. 92, 102 (2020) (internal quotation marks and citations omitted). “In reviewing a grant of summary judgment …, we independently review the record to determine whether the parties properly generated a dispute of material fact and, if not, whether the moving party is entitled to judgment as a matter of law.” Id. at 102-03 (internal quotation marks and citations omitted). “We review the record in the light most favorable to the nonmoving party and construe any reasonable inferences that may be drawn from the facts against the moving party.” Id. at 103 (internal quotation marks and citation omitted). (2) Whether the [Court of Special Appeals] erred in holding that all claimants, who have asserted or will assert claims, are intended beneficiaries of insurance policies, with vested interests in those policies from the date of their alleged injuries, and have the same rights under those policies as claimants, who have obtained judgments or entered into settlements? (3) Whether the [Court of Special Appeals] erred in holding that an insured and its insurer cannot resolve litigation by entering a settlement, in good faith, that modifies or reduces insurance coverage without the consent of all current and future tort claimants? 9 III Discussion The Claimants maintain that the Insurers and the Landlords did not have the power to reduce or eliminate coverage under the Policies to the detriment of the Claimants. The parties agree that the validity of that contention depends, in the first instance, on whether the Claimants are “intended beneficiaries” of the Policies or, instead, whether they are “incidental beneficiaries.” If the Claimants are not intended beneficiaries, but merely incidental beneficiaries, then they have no vested rights in the Policies.

According to the Insurers, the Policies do not manifest any intention to make the Claimants the primary parties in interest until they either hold a final judgment against their Landlords or have entered into an approved settlement with their Landlords. The Insurers contend that the Policies are designed to protect the financial interests of the Landlords in exchange for the payment of premiums to the Insurers. Further, the Insurers contend that no Maryland statute, regulation, or public policy dictates that tort claimants are intended beneficiaries of general liability insurance policies prior to the entry of a final judgment against an insured. Therefore, the language of the Policies is dispositive and requires this Court to conclude that the Claimants are not intended beneficiaries of the Policies to the extent they have not obtained final judgments against, or entered into approved settlements with, their Landlords.

Rather, they are incidental beneficiaries of the Policies, and are subject to changes in the Policies that result from good-faith litigation settlements between the Insurers and the Landlords. 10 The Claimants argue that prior Maryland cases, as well as persuasive out-of-state authority, compel the conclusion that tort claimants are intended beneficiaries of general liability insurance policies, and that they have vested rights in such policies from the moment they are injured. As such, they argue, CX and the Landlords could not rescind or modify the coverages that were contained in the Policies to the detriment of the Claimants and others similarly situated. For the reasons stated below, we agree with the Insurers. A. Governing Principles 1.

Construction of Insurance Policies “Maryland does not follow the rule, adopted in many jurisdictions, that an insurance policy is to be construed most strongly against the insurer. Rather, following the rule applicable to the construction of contracts generally, … the intention of the parties is to be ascertained if reasonably possible from the policy as a whole.” Kendall v. Nationwide Ins. Co., 348 Md. 157, 166 (1997) (internal quotation marks and citation omitted); see also Mesmer v. Maryland Auto. Ins.

Fund, 353 Md. 241, 252 (1999) (“In Maryland, insurance policies are treated like other contracts.”). Thus, “[e]xcept as modified by statutes or regulations, the legal principles applicable to contracts generally are also applicable to insurance policies.” Mesmer, 353 Md. at 252 . This means that “any clause in an insurance policy that is contrary to the public policy of this State, as set forth in any statute, is invalid and unenforceable.” Harleysville Mut. Ins.

Co. v. Zelinski, 393 Md. 83, 88-89 (internal quotation marks and citation omitted). 11 In most circumstances, the duty of an insurer to defend against actions and indemnify an insured in the event of an adverse judgment arises from, and is governed by, the terms of the applicable insurance policy. See Mesmer, 353 Md. at 257-58 (“We have repeatedly indicated that the obligation to defend and the obligation to indemnify are entirely contractual.”); see also Brohawn v. Transamerica Ins. Co., 276 Md. 396, 409 (1975) (“The promise to defend the insured, as well as the promise to indemnify, is the consideration received by the insured for payment of the policy premiums.”). 2. Intended Beneficiaries Versus Incidental Beneficiaries At common law, only a party to a contract could initiate an action to enforce its terms. 120 W. Fayette St., LLLP v. Mayor and City Council of Baltimore, 426 Md. 14, 35 (2012).

However, the law has evolved since, such that certain beneficiaries to a contract may also bring an action to enforce its terms. Id. at 35-36 . Not all third parties that may benefit from a contract have the power to initiate an action to enforce its terms. See id. at 36 (“It is not enough that the contract merely operates to an individual’s benefit[.]”).

Rather, a third party has the right to enforce a contract “if the contract was intended for his [or her] benefit and it ... clearly appear[s] that the parties intended to recognize him [or her] as the primary party in interest and as privy to the promise.” Id. (internal quotation marks and citation omitted). Such a third party is referred to as an “intended beneficiary.” Id. at 35-36 . The “crucial fact” in determining whether a third party is an intended beneficiary of a contract is “whether the pertinent provisions in the contract were ‘inserted … to benefit’ the third party.” CR-RSC Tower I, LLC v. RSC Tower I, LLC, 429 Md. 387, 457 (2012) 12 (quoting Lovell Land, Inc. v. State Highway Admin., 408 Md. 242, 261, 265 (2009)).

Another “factor to consider … is whether the third party is named in the contract or its antecedent agreements.” Id. (internal quotation marks and citation omitted); see also Restatement (Second) of Contracts § 302(1) (Am. Law Inst. 1981) (“Restatement”) (stating that, “[u]nless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties” and either “the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary” or “the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance”); Lovell Land, 408 Md. at 262 & n.6 (citing with approval the distinction between intended and incidental beneficiaries set forth in Restatement § 302). “In applying this standard, we look to the intention of the parties to recognize a person or class as a primary party in interest as expressed in the language of the instrument and consideration of the surrounding circumstances as reflecting upon the parties’ intention[.]” CR-RSC Tower I, 429 Md. at 458 (internal quotation marks and citation omitted).6 A beneficiary of a contract who is not an “intended beneficiary” is an “incidental beneficiary,” who “acquires by virtue of the promise no right against the promisor or the promisee.” 120 W. Fayette St., 426 Md. at 36 (quoting Lovell Land, 408 Md. at 261 (citation 6 We noted in CR-RSC Tower I that consideration of “surrounding circumstances” was apparently “a deviation from the general rule for interpreting contracts, under which we do not consider ‘extrinsic evidence’ of the parties’ intent unless the language of the contract is ambiguous.” Id. at 458 n.61. 13 omitted)); see also Restatement § 302(2) (“An incidental beneficiary is a beneficiary who is not an intended beneficiary.”). In 120 W. Fayette Street, this Court highlighted the distinction between intended and incidental third-party beneficiaries.

In that case, Baltimore City entered into a Memorandum of Agreement (“MOA”) with the Maryland Historical Trust (the “Trust”) detailing how certain historic properties were to be treated under a plan to renew a five-block area in the City. 426 Md. at 16-17 . After the Trust’s director granted approval of the City’s plans, 120 West Fayette Street, LLLP (“120 West Fayette”) filed an action seeking a declaration of rights under the MOA in order to challenge the approval. See id. at 17 . The circuit court found that 120 West Fayette was neither a party to, nor a beneficiary of, the MOA between the City and the Trust, and, based primarily on this finding, dismissed the complaint for failure to state a claim upon which relief could be granted.

Id. at 23-24 . When the case came before this Court, we considered whether 120 West Fayette was an intended beneficiary, or rather an incidental beneficiary, of the MOA. Id. at 36 . We observed that “[t]he promises and benefits set forth in the MOA are directed solely to the City and the Trust” and “[n]owhere in the MOA is it contemplated that 120 West Fayette is to receive a benefit.” Id.

Therefore, we concluded that “the parties to the MOA did not intend to recognize 120 West Fayette as the primary party in interest and as privy to the promise.” Id. at 37 (cleaned up). It followed “that 120 West Fayette, at best an incidental beneficiary to the MOA, may not file a suit requesting declaratory judgment that interprets and enforces an agreement to which it has no part.” Id. Thus, this Court recognized the 14 parties’ intent, as evidenced by the terms of the contract itself, as the primary determinant of whether a third party is an intended or an incidental beneficiary to a given contract. We also addressed the distinction between intended and incidental beneficiaries in CR-RSC Tower I, 429 Md. at 457 .

In that case, we analyzed two separate ground leases entered into between two landlords of adjoining properties and two developers who sought to create two “intertwined, mutually-dependent towers.” See id. at 456 (cleaned up). “Neither ground lease would have been executed had the other not been executed simultaneously.” Id. (cleaned up). After project delays resulted in financing for the project falling through, the developers sued the landlords. Id. at 401-03 , 451 n.54.

The jury found in favor of the developers and entered an award of damages against the landlords jointly and severally. Id. at 403 . Each landlord was responsible for each developer’s damages because “[t]he jury found that each [developer] was entitled to enforce the [other’s] ground lease, either as a third-party beneficiary ... or a third-party entitled to the benefit of a covenant running with the land[.]” Id. at 454 (internal quotation marks omitted). The Court of Special Appeals reversed the damages award, concluding that there was insufficient evidence to support either theory of joint and several liability.

Id. This Court affirmed. As to the intended beneficiary theory, we contrasted the developers with the beneficiaries in Shillman v. Hobstetter, 249 Md. 678 (1968), and Prescott v. Coppage, 266 Md. 562 (1972). CR-RSC Tower I, 429 Md. at 456-60 .

Shillman involved an agreement between a residential developer and a lender under which the lender agreed to issue conditional commitments for certain planned homes if the developer would refund certain purchasers’ deposits. 249 Md. at 682-83 . The Shillman Court held that the 15 purchasers to whom the deposits were to be returned were intended beneficiaries of the contracts. Id. at 690 . As we explained in CR-RSC Tower I, “[t]he only thing the developer [in Shillman] promised to do under the agreement (return the deposits) was clearly intended to benefit the purchasers, so logically we found that the purchasers were intended third- party beneficiaries.” 429 Md. at 459 (citing Shillman, 249 Md. at 690 ).

Prescott v. Coppage concerned the receivership of Maryland Thrift Savings and Loan Company (“Maryland Thrift”). Prescott was appointed special counsel to Maryland Thrift’s receiver. 266 Md. at 574 . Coppage sued the receiver, as well as Prescott and others, after the receiver paid creditors with lower priority than Coppage, leaving insufficient assets to fully pay the debt that Maryland Thrift owed to Coppage. Id. at 565-66 .

The order appointing the receiver required the receiver “to take possession of [Maryland Thrift’s] assets and property and hold or dispose of them under the direction, supervision and further order of this Court.” Id. at 574 (internal quotation marks omitted). The order also required the receiver “to mail a copy of the order of appointment to each creditor of Maryland Thrift[.]” Id. (cleaned up). In reversing the trial court’s judgment in favor of Prescott, this Court explained that “the order of appointment of [Maryland Thrift’s receiver] itself makes clear that all creditors of Maryland Thrift were third party beneficiaries.

The order of appointment of Prescott by necessary implication bound him to those creditor beneficiaries.” Id. Thus, this Court held that Prescott was jointly liable with the receiver to Coppage. Id. at 576 . In CR-RSC Tower I, we observed that the documents at issue in Shillman and Prescott “were created specifically to benefit the third parties in question.” CR-RSC Tower 16 I, 429 Md. at 459 . “The same cannot be said of the ground leases” at issue in CR-RSC Tower I, “which were clearly entered into first and foremost for the benefit of the parties that signed them.” Id.

Important in our analysis was that: In each ground lease, the purported third-party beneficiary is mentioned only briefly and in passing – to wit, in sections involving easements running between the two parcels, plans for the development of common areas, and overall site plans that mention both towers. The peripheral nature of these provisions – which simply describe the joint nature of the two projects – is substantially different from the central provisions in Shillman and Prescott, which demonstrated how the third parties in those cases were “owed ... a duty under the contract[s].” This, we said, was the “crucial fact” in support of finding a third-party beneficiary, and it is not present here. Id. at 459-60 (footnotes omitted). B. The Claimants Are Not Intended Beneficiaries of the Policies Until They Obtain a Final Judgment Against, or Enter into a Settlement Agreement with, Their Landlords.

As discussed above, three of the Claimants obtained final judgments against their Landlords prior to the settlements between their Landlords and CX in the rescission actions. Thus, under the terms of the Policies, those Claimants became intended beneficiaries of the Policies as of the date they obtained their judgments against the Landlords in the trial court. After they secured the judgments, those three Claimants had the right to enforce the pre-settlement terms of the Policies,7 both under the terms of the 7 Thus, the Court of Special Appeals’ holding that the Claimants are intended beneficiaries of the Policies is correct as to these three Claimants (Devon Johnson, Chauncey Liles, and Shyliyah Streeter). However, these Claimants’ rights under the Policies vested at the time they obtained their judgments against the Landlords, not at the time of injury.

We therefore affirm the judgment of the Court of Special Appeals as to these three Claimants on different grounds than the Court of Special Appeals articulated.