United Services Automobile Association v. Riley

GREENE, J. This matter originated with a complaint for declaratory relief filed by petitioner, United Services Automobile Association (“USAA”), in the Circuit Court for Baltimore City. The complaint named Kenny A. Hooper, Jr. and respondents in the instant case, Rita Towana Riley, 1 Jeremy Carpenter, Christian Carpenter, and Wendy Carpenter (“the Carpenters”) as defendants. USAA sought a declaration of the limits of insurance ⁶⁰ coverage of four consecutive policies issued to Hooper 2 for the property he owned where the Carpenter children allegedly suffered lead exposure and related injuries. Respondents answered USAA’s complaint and filed a counterclaim for declaratory relief.

Subsequently, USAA filed a motion for summary judgment. The Circuit Court issued a Memorandum and Order granting USAA’s motion for summary judgment in part. The Circuit Court ultimately issued a Declaratory Judgment stating: (1) that the injuries allegedly suffered by the Carpenter children are confined to a single “occurrence,” as “occurrence” is defined by the USAA policy; (2) that the Limit of Liability provision of the USAA policy unambiguously limited the recovery of damages because of injury of the Carpenter children to “an aggregate total of the policy limit of $300,000”; (3) that the Carpenter children cannot establish, as a factual matter, that any one of them suffered bodily injury within the meaning of the USAA policies during the terms of the first two policies and therefore, the maximum number of policies implicated is two; (4) that the Limit of Liability provision in the USAA policies is ambiguous and therefore does not limit USAA’s responsibility under the two implicated USAA policies to $300,000 for all bodily injury to the Carpenter children; and (5) that to the extent that Hooper is found liable in the underlying tort case, USAA’s indemnification obligation is limited to providing no more than $600,000 of liability coverage. In a reported opinion, the Court of Special Appeals held that the Circuit Court erred in concluding that there was no genuine dispute of material fact as to whether the Carpenter children were injured during the first and second policy periods, and therefore reversed the judgment of the Circuit Court and remanded for further proceedings.

Riley v. United Services Automobile Assoc., 161 Md.App. 573 , 871 A.2d 599 (2005). The intermediate appellate court, although not re ⁶¹ quired to reach the issue of whether the Circuit Court erred in declaring the amount of coverage USAA’s policies provided, addressed the issue in order to provide some guidance to the court and parties on remand. USAA presents two questions for our review, the first of which we recast: I. Whether, with regard to the first two USAA policy periods, the Circuit Court erred in granting summary judgment as a result of the respondents’ alleged failure to prove that the Carpenter children had suffered injuries, as defined by the policies, during the first two policy periods? 3 II. Whether a limit-of-liability provision in each of four liability policies issued by the same insurer limits the insurer’s liability coverage to a single per occurrence limit when bodily injury spans more than one policy period?

We answer the first question in the affirmative and the second question in the negative and affirm the judgment of the Court of Special Appeals. Facts Hooper owned a house located at 1808 West Mosher Street (“the property”), into which the Carpenter children moved in June 1990. At the time they moved into the property, Wendy Carpenter was 2 years old; Christian Carpenter was approximately 1 y> years old; and Jeremy Carpenter was 4 months old. While residing at the property, the children were raised by their grandmother, Annie Riley Barksdale.

At a ⁶² deposition, Ms. Barksdale stated that she observed problems with the paint in the property, including paint chipping around the window areas in the living room, kitchen, and middle bedroom on the second floor, and paint dust in the bath tub. Ms. Barksdale also witnessed the children gnawing on the window sills in the bedroom. Harriet Peartree, who is Ms. Barksdale’s sister, also testified to the condition of the paint at the property, stating that the paint surface was uneven and fragile on the window sills and door frames. While she never witnessed such an occurrence, on multiple occasions, the children told her that “one of the kids is eating the paint” which she believed occurred in either Ms. Barksdale’s bedroom or the middle bedroom.

In April 1993, Wendy Carpenter first tested for elevated blood lead levels and her level was 19 micrograms per deciliter (“|xg/dL”) 4 , which increased to 23 |xg/dL in September 1993. In May 1993, Christian Carpenter’s initial blood lead level was 23 |xg/dL, which increased in June 1993 to 24 |xg/dL, and in September 1993 to 28 ¡xg/dL. Jeremy Carpenter’s initial blood lead level was 29 |xg/dL in April 1993, and after a series of increases and decreases, 5 declined to 18/19 |xg/dL by December 1993. The Carpenter children moved out of the property in the Fall of 1993.

During the respondents’ tenancy at the property, USAA insured Hooper under a series of homeowner’s policies. The ⁶³ first policy began on July 28, 1990 and was renewed on July 28, 1991. In March of 1992, some changes were made to the policy and a new policy was issued that covered March 1,1992, until March 1, 1993. That policy was then renewed from March 1, 1993, until March 1, 1994.

The USAA policies defined “bodily injury” as “bodily harm, sickness or disease, including required care, loss of services and death that results.” “Occurrence” was defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in: a. bodily injury; or b. property damage. Personal liability was addressed by the USAA policies as follows: SECTION II—LIABILITY COVERAGES Coverage E—Personal Liability [If] a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will: 1. pay up to our limit of liability for the damages for which the insured is legally liable; and 2. provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is inappropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from ,the occurrence equals our limit of liability. * * * * SECTION II—CONDITIONS 1.

Limit of Liability. Our total liability under Coverage E for all damages resulting from any one occurrence will not be more than the limit of liability for Coverage E as shown in the Declarations. This limit is the same regardless of the number of insureds, claims made or persons injured. All bodily injury and property damage resulting ⁶⁴ from any one accident or from continuous or repeated exposure to substantially the same general harmful conditions shall be considered to be the result of one occurrence.

Each of the policies provided $800,000 of liability coverage. Respondents filed a cause of action against Hooper alleging that he negligently exposed the Carpenter children to lead paint during their tenancy which resulted in brain damage to the Carpenter children. During the discovery process, a dispute arose as to the applicability of Hooper’s insurance policies for the property, and USAA filed a complaint for declaratory relief on October 12, 2001, naming as defendants Riley, the Carpenters, and Hooper to resolve the insurance issue. USAA asked the Circuit Court to issue a declaration limiting insurance coverage to $300,000.

Respondents claimed that Hooper was insured for $3,600,000 for their injuries under the series of policies. USAA filed a Motion for Summary Judgment alleging that respondents could not prove that any bodily injuries were sustained before March 1, 1992, during the first and second policy periods. The Circuit Court issued a Memorandum and Order, granting summary judgment in part: The court determines, for the reasons stated by [USAA] in its memoranda, that the language of the policy defining an “occurrence” unambiguously confines [respondents’] exposure to a single occurrence. Similarly, the policy’s “Limit of Liability” unambiguously limits the recovery of [the Carpenter children] to an aggregate total of the policy limit of $300,000.

Accordingly, the total coverage for [the Carpenter children’s] exposure under a single policy is $300,000. The remaining issue of whether a single policy limit of $300,000 is available for the four policy periods or whether the limit is available in each of the four policy periods is ambiguous under the terms of the policies and, for that reason, cannot be resolved by this Court on summary judgment as a matter of law. However, as a factual matter, on the record before the Court, the [Carpenter children] cannot establish that any one of them suffered a bodily ⁶⁵ injury within the meaning of the policies during the term of the first two policies, i.e. July 28, 1990 to March 1, 1992.

Therefore, as a factual matter, the maximum number of policies implicated is two. Accordingly, [USAA] is entitled to summary judgment to the extent that it seeks to limit its exposure to a single occurrence (including all three [Carpenter children]) over two policy periods for a total exposure in the amount of $600,000. Summary judgment is GRANTED to the extent discussed and DENIED in all other respects. Ultimately, the Circuit Court issued the following Declaratory Judgment, dated February 21, 2003: 3.

The injuries allegedly suffered by the Carpenter children while in or about 1803 West Mosher Street were caused by one “occurrence” as defined by the USAA policies. The definition of “occurrence” in the USAA policies confines the Carpenter Childrens’ injuries allegedly suffered by them while in or about 1803 West Mosher Street to a single “occurrence.” Similarly, the Limit of Liability provision unambiguously limits the recovery of damages because of injury to all three Carpenter Children to an aggregate total of the policy limit of $300,000. Accordingly, the total coverage for damages for the three Carpenter Children’s injuries under a single policy is $300,000. 4. As a factual matter, on the record before the Court, the three Carpenter Children cannot establish that any one of them suffered bodily injury within the meaning of the USAA policies during the terms of the first two policies, i.e., July 28, 1990 to March 1, 1992.

Therefore, as a factual matter, the maximum number of USAA policies implicated is two. [5]. The Limit of Liability provision in the USAA policies is ambiguous and therefore does not limit USAA’s responsibility under the two implicated USAA policies to $300,000 for all bodily injury to all of the Carpenter Children. [6.] To the extent that Kenneth Hooper is found liable in the underlying case, USAA’s indemnification obligation is ⁶⁶ limited to providing no more than $600,000 of liability coverage. [7.] This declaratory judgment is confined solely to the issues of the number of “occurrences,” when “bodily injury” occurred, and the meaning and applicability of the limit of liability provision in the IJSAA policies. This declaratory judgment does not determine or address the merits of [the respondents’] claims against Hooper in the underlying litigation. Respondents appealed the judgment of the Circuit Court to the Court of Special Appeals.

The intermediate appellate court reversed the Circuit Court and remanded the matter back to that court for further proceedings. USAA appealed that decision, and this court granted certiorari. United Services Automobile Assoc. v. Riley, 388 Md. 97 , 879 A.2d 42 (2005). STANDARD OF REVIEW Maryland Rule 2-501 indicates that a motion for summary judgment is appropriate “on all or part of an action on the ground that there is no genuine dispute as to any material fact and that the party is entitled to judgment as a matter of law.” A motion for summary judgment may be supported by affidavit.

When reviewing the grant or denial of a motion for summary judgment we must determine whether a material factual issue exists, and all inferences are resolved against the moving party. King v. Bankerd, 303 Md. 98, 110-111 , 492 A.2d 608, 614 (1985) (citing Lynx, Inc. v. Ordnance Products, Inc., 273 Md. 1, 7-8 , 327 A.2d 502, 509 (1974)). “ ‘[E]ven where the underlying facts are undisputed, if those facts are susceptible of more than one permissible inference, the choice between those inferences should not be made as a matter of law, but should be submitted to the trier of fact.’ ” King v. Bankerd, 303 Md. at 111 , 492 A.2d at 614 (quoting Porter v. General Boiler Casing Co., 284 Md. 402, 413 , 396 A.2d 1090, 1096 (1979) (citations omitted)). The function of a summary judgment proceeding is not to try the case or to ⁶⁷ attempt to resolve factual disputes but to determine whether there is a dispute as to material facts sufficient to provide an issue to be tried. Honaker v. W.C. & A.N. Miller Development Co., 285 Md. 216, 231 , 401 A.2d 1013, 1020 (1979) (citing Dietz v. Moore, 277 Md. 1, 4-5 , 351 A.2d 428 (1976)).

A “material fact” is one which will somehow affect the outcome of the case. Id. (citation omitted). An appellate court reviewing a summary judgment examines the same information from the record and determines the same issues of law as the trial court.

PaineWebber Inc. v. East, 363 Md. 408, 413 , 768 A.2d 1029, 1032 (2001) (citation omitted). We are often concerned with whether a dispute of material fact exists when reviewing the grant of a summary judgment motion. Lippert v. Jung, 366 Md. 221, 227 , 783 A.2d 206, 209 (2001) (citing Hartford Ins. Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135, 144 , 642 A.2d 219, 224 (1994)).

We recently reiterated the standard of review for a trial court’s grant or denial of a motion for summary judgment in Myers v. Kayhoe, 391 Md. 188 , 892 A.2d 520 (2006): The question of whether a trial court’s grant of summary judgment was proper is a question of law subject to de novo review on appeal. Livesay v. Baltimore, 384 Md. 1, 9 , 862 A.2d 33, 38 (2004). In reviewing a grant of summary judgment under Md. Rule 2-501, 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 9-10 , 862 A.2d at 38 .

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 10 , 862 A.2d at 38 . Id. at 203, 892 A.2d at 529 . DISCUSSION I. Whether, with regard to the first two USAA policy periods, the Circuit Court erred in granting summary judgment as a ⁶⁸ result of the respondents’ alleged failure to prove that the Carpenter children had suffered injuries, as defined by the policies, during the first two policy periods?

Petitioner argues that respondents provided no admissible evidence that exposure to lead resulted in bodily injury in the first and second policy periods of the USAA policies and thus, failed to produce adequate evidence to refute USAA’s summary judgment motion. 6 Howard M. Klein, M.D., was named as an expert witness in the underlying tort action and gave his first deposition on May 28, 2001. In testifying regarding Wendy Carpenter’s blood lead levels, Dr. Klein stated that Wendy’s exposure to lead began a few months before she was first tested for lead exposure. Dr. Klein’s rationale for this opinion was based on the fact that it would take a certain period of time to reach Wendy’s tested level of 19 gg/dL in September 1993. Specifically, Dr. Klein opined: It takes a while to get to 19.

You can do it, I guess, if you take a shotglass full of chips at once, but I’m usually of the opinion that to get into 20, if you’re talking about a little or moderate hand to mouth activity and some lead dust, it takes you a couple of weeks to get there. So, at least March of '93 to, at least, through most of the year of '93. Dr. Klein testified that Jeremy Carpenter’s lead exposure began in April 1993, and that Christian Carpenter’s lead exposure began a few weeks prior to May 1993. As a result, ⁶⁹ USAA contends that there is no proof that any of the children were exposed to lead during the first two policy periods (and that Christian’s level did not indicate injury even during the third policy period).

In response to USAA’s argument that the respondents could not prove bodily injury during the first two policy periods, the respondents submitted an affidavit from Dr. Klein. Petitioner alleges that this affidavit contradicts Dr. Klein’s initial deposition testimony. In the affidavit, with regard to the Carpenter children’s lead exposure, Dr. Klein noted: [The testimony of the respondents, Ms. Barksdale and Peartree] establishes that beginning the first year the family moved into [the property,] the property contained deteriorated, chipping and flaking paint and dust hazards in the windowsills and bathtub. Moreover, the Carpenter children would gnaw on the windowsills and one of the children was observed by the other children eating paint. [Assuming that this information is true and correct, it is my opinion within [a] reasonable degree of medical probability that Christian Carpenter and Wendy Carpenter were “exposed” to hazardous lead-based paint and dust at [the property] beginning on the date they first moved into the property in June 1989.

Likewise, it is my opinion within a reasonable degree of medical probability that Jeremy Carpenter was “exposed” to hazardous lead-based paint and dust at [the property] beginning in útero and continuing at his birth[.] By exposure, I mean inhaling and/or ingesting lead-based paint and dust into the body, lungs and bloodstream. It is my further opinion within a reasonable degree of medical probability that this exposure for all three children caused damage on a cellular level to the children’s brain, disrupting normal cellular development. These opinions are based on the deteriorated condition of the lead-based paint while the children resided at the property, evidence of hand to mouth activity, gnawing on leaded paint, as well as actual observation of ingestion of leaded paint chips. ⁷⁰ [A]n injury is the alteration of structure or function of a cell, tissue or organ. Physical or chemical damage to the body which may be detectable only on a microscopic or sub clinical level also constitutes an injury.

There are injuries to cells, tissues and organs caused by exposure to lead paint, lead paint chips, lead paint fumes, and/or lead paint dust, even though the injuries may not be noticeable to a harmed individual or diagnosable by a clinician until some later point in time. Lead is especially harmful to the developing brain and nervous systems of fetuses. There is probably no safe threshold at which lead has no effect [on] children under age five, whose brains are rapidly growing and developing are most vulnerable to damage by low levels of lead exposure .... [infants and toddlers below the age of five years] may be suffering from the effects of cumulative low-level lead exposure years before they are clinically observable. Essentially, Dr. Klein testified that all of the children were exposed to lead during each of the four policy periods, and therefore, suffered the requisite bodily injury to trigger the policy coverage.

Dr. Klein was deposed a second time on December 18, 2002, and his responses on that date are discussed below. USAA argues that Dr. Klein’s testimony lacked a sufficient factual basis that was not the result of reliable principles and methods as required by Md. Rule 5-702. 7 USAA asks this Court to discount Dr. Klein’s opinion because he gave no explanations for his conclusions and because Dr. Klein’s initial deposition testimony was allegedly contradicted ⁷¹ by his affidavit and later deposition, and is therefore unreliable. We shall address the reliability argument first. During the motions hearing for USAA’s motion for summary judgment on January 8, 2003, respondents’ counsel offered the following explanation for the alleged “contradiction” in Dr. Klein’s affidavit and deposition testimony: [Wjhat really is this supposed contradiction in Dr. Klein’s testimony is not contradiction at all ... [bjecause the original questions that he was asked were based on a false premise ... that in order to establish exposure you have to have lead levels.... [T]he children had certain lead levels and the Doctor was asked a limited question; [“Wjell, the child has a lead level of 20, can you tell us from the lead level of 20 itself how long that means the child is being exposed to lead.” And then he gives basically an answer that says[, “I] can’t say exactly, but it means at least a couple of months of exposure.” But he also says[, “W]ell, from the 20 by itself, all I can be ... absolutely certain of ... is that the exposure had gone on for at least two months.” But he wasn’t asked—the premise of that question is, you have to have a lead level in order to show that the child’s had exposure....

The testimony that we have offered in our affidavits from the mom and from the aunt is that from the day they moved in the house there was chipping and flaking paint all [over] the place. And that the children were mobile all around the house, that the children had a lot of hand-to-[mouth] activity that they were actually seeing, I think on more than one occasion, to put paint chips in their mouths.... And then during that whole early time they’re not testing for lead, but the house is in horrible condition. It’s reasonable to assume and I think that the finder of [fact] can assume that there’s lead dust all over the house.

The Health Department goes in and inspects and the Health Department, which are going to be an independent witness in the case, says there’s 83 separate locations in this house where there’s chipping and flaking paint that’s a health hazard that’s hable to poison children. ⁷² It appears that counsel for respondents was arguing that, at the initial deposition on May 28, 2001, Dr. Klein was not asked about the beginning date of the children’s exposure overall, but rather, the beginning date of the exposure in relation to the children’s measured lead levels. While the record does not contain the May 2001 deposition in its entirety, certain pages are included in the Record Extract. It appears that the question posed to Dr. Klein regarding Wendy’s lead exposure referred specifically to the time frame of her testing: [COUNSEL FOR USAA]: [W]ell, we’re talking about certain levels here and it’s my understanding that you have a level of 19 and then five months later a level of 23. So, those are the specific levels that we’re talking about.

Are you saying that we are talking about those levels that the age is between six and ten for children, that would create the same effect that you just described or is it any different for those levels? [DR. KLEIN]: I think it can be significant. In the literature that you asked me to show you before, the [Centers for Disease Control], a writing in October of '91, it’s quoted that anything over ten micrograms per deciliter is being the threshold for action and these lead levels are well above that. There are also levels which have been widely discussed in the literature as levels of concern.

So ... I think that that’s the ballpark we’re talking about. * * * * [COUNSEL FOR USAA]: [Y]ou have the two [lead] levels in April and September of '93, 19 and 23 [pg/dL]. [DR. KLEIN]: Right. [COUNSEL FOR USAA]: Do