Pennsylvania National Mutual Casualty Insurance Company v. Jacob Dackman & Sons, LLC et al

Filing 34

MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 9/14/2017. (bas, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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PENNSYLVANIA NATIONAL
MUTUAL CASUALTY
INSURANCE COMPANY,

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Plaintiff,

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v.

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JACOB DACKMAN & SONS, LLC, et al.,

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Defendants.
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Civil Action No.: RDB-16-2640

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MEMORANDUM OPINION
This case arises out of a lead paint lawsuit filed by defendant Daniel Heggie
(“Heggie”) in the Circuit Court of Maryland for Baltimore City against his former landlords,
defendants Jacob Dackman & Sons, LLC and Elliot Dackman (“the Dackman parties”).
Daniel Mathew Heggie, Jr. v. Jacob Dackman & Sons, LLC, et al., Case No. 24-C-13-006788 (Cir.
Ct. Balt. City) (“the Underlying Litigation”). Following a jury trial in that case, judgment was
entered against the Dackman parties in the amount of $1,006,469.00 (“the Underlying
Judgment”).
In this Court, plaintiff Pennsylvania National Mutual Casualty Insurance Company
(“plaintiff” or “Penn National”) seeks a declaratory judgment regarding the extent of its
obligation to indemnify the Dackman parties pursuant to a commercial general liability
policy it issued to them on June 1, 1991, and which subsequently was renewed through
August 1, 1997. (ECF No. 1.) Specifically, Penn National asserts that it is only liable for
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$165,606.72 of the Underlying Judgment against the Dackman parties based on the “pro rata
time-on-the-risk” principle set forth in Pennsylvania Nat. Mut. Cas. Ins. Co. v. Roberts, 668 F.3d
106 (4th Cir. 2012), a case arising out of this Court. Pennsylvania Nat. Mut. Cas. Ins. Co. v.
Attsgood Realty, JFM-09-2650, 2010 WL 2998681. It is undisputed that Penn National already
has paid this amount to Heggie. (ECF No. 10 at ¶ 4.) While defendant Heggie does not
dispute that Roberts governs the outcome of this case, he asserts that the pro rata time-on
the-risk calculation should be based on “the limited period of time that [Heggie] was being

injured by lead-based paint—and not, as Penn National alleges, the entire time he was
simply being exposed to [] lead-based paint.” (ECF No. 29-1 at 3) (emphasis in original.)
Thus, Heggie argues that Penn National must indemnify the Dackman parties for a total of
$620,991.37, and therefore should pay him an additional $455,384.65 toward the total
judgment entered in the Underlying Litigation. 1
Now pending before this Court is Penn National’s Motion for Summary Judgment
(“Plaintiffs’ Motion”). (ECF No. 26.) During a teleconference on September 13, 2017, the
parties confirmed that no additional factual discovery is required; that this Court should
render its decision based on the record developed in the Underlying Litigation; and that in
rendering its decision on plaintiff’s pending Motion for Summary Judgment, this Court
should rule as a matter of law on the overall merits of this declaratory judgment action.
(ECF No. 33.) No additional hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For
the reasons stated below, Penn National’s Motion for Summary Judgment is DENIED to
Based on their failure to plead or otherwise defend in this litigation, defaults were entered against
defendants Jacob Dackman & Sons, LLC and Elliott Dackman on December 8, 2016. (ECF No. 15.)
Pursuant to the judgment of the Circuit Court of Maryland for Baltimore City, the Dackman parties remain
liable for any amount not paid by Penn National.

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the extent it seeks to limit its liability to $165,606.72. It is further ADJUDGED that Penn
National is liable under the insurance contract for 25% of Heggie’s damages (amounting to
$251,617.25) based on the “pro rata time-on-the-risk” principle set forth in Roberts.
Accordingly, Penn National is liable to Heggie for an additional $86,010.53 toward the
Underlying Judgment.
BACKGROUND
Penn National issued an insurance contract to the Dackman Parties, contract number
307-0351437, for the contract period June 1, 1991 to June 1, 1992, which was renewed
annually and in effect through August 1, 1997. 2 (ECF No. 1 at ¶ 8.) The insurance contract
provided benefits in connection with certain real estate identified in the insurance contract,
including, among other properties, 2315 East Hoffman Street in Baltimore, Maryland (the
“Premises”). (Id. at ¶ 10.) The Insurance Contract included a commercial general liability
coverage part. (Id. at ¶ 11.)
Defendant Daniel Heggie (“Heggie”) was born on October 2, 1993 and began living
at 2315 East Hoffman Street on January 12, 1994, when he was approximately three and
one-half months of age. (ECF No. 26-1 at ¶¶ 1-2; ECF No. 29-1 at ¶¶1-2.) Heggie’s
tenancy there ended permanently when he vacated the Premises on September 9, 1998. (Id.
at ¶ 2; id. at ¶ 2.) It is undisputed that the Premises contained chipping, peeling, and flaking
lead-based paint during Heggie’s tenancy there. (ECF No. 26-1 at ¶ 5.)

While the insurance policy was in effect from June 1, 1991 through August 1, 1997, it is undisputed that
coverage benefits for periods other than June 1, 1996 through August 1, 1997 were exhausted and unavailable
to satisfy the Underlying Judgment. (ECF No. 26-1 at ¶¶ 37-43.)

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On November 12, 2013, Heggie filed a lawsuit in the Circuit Court of Maryland for
Baltimore City styled Daniel Mathew Heggie, Jr. v. Jacob Dackman & Sons, LLC, et al., Case
Number 24-C-13-006788, alleging, inter alia, that the Dackman Parties had caused him to
sustain certain personal injuries as a result of exposure to lead in paint on the Premises.
(ECF No. 1 at ¶ 13.) The evidence presented at trial in the Underlying Litigation was that
Heggie first exhibited an elevated blood lead level (“BLL”) on August 18, 1995. (ECF No.
26-1. at ¶ 7; ECF No. 29-1 at ¶ 3.) Subsequent tests revealed that Heggie also had elevated
BLLs on August 18, 1995, July 8, 1997, April 13, 1999, and February 13, 2001. (Id. at ¶¶ 7-8,
28; id. at ¶¶ 3-5.) Heggie’s medical causation expert, Dr. Daniel Levy, M.D., opined that
Heggie’s elevated BLLs were caused by his exposure to lead paint in the premises. (ECF
No. 26-1 at ¶ 26.) Dr. Levy was unable to opine whether Heggie was exposed to lead paint
after he vacated the Premises. (Id. at ¶ 30.) However, Dr. Levy testified that: “What the
general trend was when [Heggie] moved out of [the Premises]…is that the lead levels
gradually came down, that the implication of that to me is that there was not a continuing
source of exposure.” (ECF No. 29-1 at ¶ 7) (citing ECF No. 26-8 at 112, Apr. 20, 2016 Trial
Tr. at 112:7-10.) At the conclusion of the jury trial in the Underlying Litigation, judgment
was entered against the Dackman parties in the amount of $1,006,469.00. (ECF No. 26-1 at
¶ 51.)
STANDARD OF REVIEW
Rule 56 of the Federal Rules of Civil Procedure provides that a court “shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A
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material fact is one that “might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue over a material fact
exists “if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id. In considering a motion for summary judgment, a judge’s function is
limited to determining whether sufficient evidence exists on a claimed factual dispute to
warrant submission of the matter to a jury for resolution at trial. Id. at 249.
In lead paint or “continuous trigger” cases such as this, “Maryland courts determine
an insurer’s liability through a “pro-rata allocation by ‘time on the risk.’” Pennsylvania Nat.
Mut. Cas. Ins. Co. v. Roberts, 668 F.3d 106, 111 (4th Cir. 2012). Under this principle, “[e]ach
insurer is liable for that period of time it was on the risk compared to the entire period during
which damages occurred.” Mayor & City Council of Baltimore v. Utica Mut. Ins. Co., 145 Md.
App. 256, 313, 802 A.2d 1070, 1104 (2002) (quoting Domtar, Inc. v. Niagara Fire Insurance Co.,
563 N.W.2d 724, 733 (Minn. 1997)).
ANALYSIS
It is undisputed that Penn National is contractually obligated to indemnify the
Dackman parties pursuant to an insurance policy in effect from June 1, 1996 to August 1,
1997—that is, 426 days. (ECF No. 26-1 at ¶¶ 37-38.) It is also undisputed that the
calculation of Penn National’s liability is governed by the “pro rata time-on-the-risk”
principle set forth in Roberts, 668 F.3d 106. (ECF No. 26-1 at ¶ 45; ECF No. 29-1 at 2-3.)
Under Roberts, the “insurer is liable for that period of time it was on the risk compared to the
entire period during which damages occurred.” Roberts, 668 F.3d 106, 113 (emphasis in
original) (quoting Utica, 145 Md. App. 256, 802 A.2d 1070, 1103).
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Penn National asserts that the “entire period during which damages occurred” is the
2,589 day period from January 12, 1994—when Heggie moved into the Premises—to
February 13, 2001—the date of Heggie’s final elevated BLL. (ECF No. 26-1 at 22-25.)
Thus, Penn National asserts that its “pro rata time-on-the-risk” liability equals 16.45% of the
Underlying Judgment—a total of $165,606.72. 3
While Heggie does not dispute the 426 insured day numerator, he asserts that Penn
National overstates the appropriate denominator—the “entire period during which damages
occurred.” (ECF No. 29-1 at 3-4.) Specifically, Heggie asserts that the correct figure is the
690 day period from August 18, 1995—the date of Heggie’s first elevated BLL—to July 8,
1997—the date of Heggie’s last elevated BLL test before he vacated the Premises. (Id.)
Thus, Heggie asserts that Penn National’s “pro rata time-on-the-risk” liability equals 61.7%
of the Underlying Judgment—a total of $620,991.37. 4 (Id. at 8-9.)
The disputed question of law, therefore, is the proper determination of the “entire
period during which [Heggie’s] damages occurred” under Roberts. Although the Fourth
Circuit in Roberts affirmed the district court’s use of the plaintiff’s final elevated BLL as the
“cut-off point for [Roberts’] period of exposure,” Roberts does not mandate the use of this
indicator, and the basis for the district court’s use of this date is somewhat unclear. See
Pennsylvania Nat. Mut. Cas. Ins. Co. v. Attsgood Realty, JFM-09-2650, 2010 WL 2998681, at *1,
n. 2 (D. Md. July 27, 2010) (“Roberts continued to reside at the subject premises until
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Penn National’s calculation is as follows:
426 insured days / 2,589 days of damages = 16.45 %.
16.45% x $1,006,469.00 Underlying Judgment = $165,606.72 pro rata time-on-the-risk liability.

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Heggie’s calculation is as follows:
426 insured days / 690 days of damages = 61.7 %.
61.7% x $1,006,469.00 Underlying Judgment = $620,991.37 pro rata time-on-the-risk liability.

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sometime in 1998 but I find that the August 1995 test should be the cut-off date for
application of the continuous trigger rule because by that time the harm had been done.”).
Accordingly, this Court is not bound to use Heggie’s February 2001 BLL as the end date of
the “entire period during which damages occurred,” but must base this determination on the
evidence presented at trial in the Underlying Litigation. See ECF No. 33.
Dr. Daniel Levy testified in the Underlying Litigation that Heggie was exposed to
lead-based paint while living at the Hoffman Street Premises, that his exposure there was a
substantial contributing factor to his elevated BLLs, and that Heggie’s exposure to leadbased paint there caused his injury. (ECF No. 26-1 at ¶¶ 16-18) (citing ECF No. 26-8 at 112,
Apr. 20, 2016 Trial Tr. at 84-90.) While Heggie’s earliest elevated BLL was measured on
August 18, 1995, his exposure preceded his manifestation of an elevated BLL. See ECF No.
26-8 at 122-123 (“[G]enerally if I see a lead level, I presume that the child is exposed prior to
the date where the child was tested.”). Heggie moved into the lead-polluted premises on
January 12, 1994. (ECF No. 26-1 at ¶ 2.) There is no evidence of any lead abatement
between Heggie’s move-in and his August 18, 1995 elevated BLL. Thus, the evidence
indicates that the ‘trigger’ for coverage of Heggie’s damages was the date when he was first
exposed to the lead-polluted property—January 12, 1994—and not when he was first tested for
lead poisoning, in August 1995.
Turning then to the end date of Heggie’s damages, it is undisputed that Heggie
continued to manifest elevated BLLs after he vacated the Hoffman Street Premises on
September 9, 1998. (ECF No. 26-1 at ¶ 28.) Based on the continuing presence of lead in his
blood, Penn National asserts that Heggie continued to be injured until February 2001, the

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date of his final elevated BLL. 5 (Id. at ¶¶ 19, 28.) While the parties agree that the continued
presence of lead in Heggie’s blood was harmful, Penn National is unable to point to any
known external source of lead poisoning which would trigger insurance coverage of Heggie’s
damages following his move-out from the Hoffman Street Premises. Indeed, the undisputed
record before this Court reflects that Dr. Levy was unable to opine whether Heggie’s
elevated BLLs in April 1999 and February 2001 were attributable to continued exposure to
lead from an external source, or from the internal redistribution of the lead to which Heggie
already was exposed at the Premises. (Id. at ¶ 30.) Specifically, Dr. Levy testified that
“[w]hat the general trend was when [Heggie] moved out of [the Premises]…is that the lead
levels gradually came down, that the implication of that to me is that there was not a continuing
source of exposure.” (ECF No. 29-1 at ¶ 7) (citing ECF No. 26-8 at 112, Apr. 20, 2016 Trial Tr.
at 112:7-10) (emphasis added.) As there is no evidence of an independent source triggering
coverage of Heggie’s injuries, then the appropriate end date for Heggie’s “entire period of
damages,” as defined by the Fourth Circuit in Roberts, is the latest date of lead exposure
triggering coverage—here, September 9, 1998 when he permanently vacated the Hoffman
Street Premises. 6
Based on the foregoing, the “entire period during which [Heggie’s] damages
occurred” under Roberts was the 1,701 day period from January 12, 1994, when he moved
into the Hoffman Street Premises, until September 9, 1998, when he permanently vacated
5 This Court notes the perverse implication of Penn National’s position: under its theory, the longer the
duration of the injury, the less compensation the victim would receive—even as the period of applicable
insurance coverage remained the same.

While Penn National seeks to marshal as evidence certain allegations of subsequent exposure made by Heggie
in the Underlying Litigation and in related coverage actions, it is unable to point to any other evidence of
Heggie’s exposure to lead paint after he vacated the Hoffman Street property. See ECF No. 30 at 7-8.

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the Premises. (ECF No. 26-1 at ¶¶ 1-2; ECF No. 29-1 at ¶¶1-2.) Accordingly, applying the
agreed 426 insured day numerator, Penn National is contractually obligated to indemnify the
Dackman parties for 25% of Heggie’s damages, or $251,617.25. 7 As Penn National has
already paid to Heggie $165,606.72, it remains liable to him for an additional $86,010.53.
CONCLUSION
For the reasons stated above, Penn National’s Motion for Summary Judgment (ECF
No. 26) is DENIED to the extent it seeks to limit its liability to $165,606.72. It is further
ADJUDGED that Penn National is liable under the insurance contract for 25% of Heggie’s
damages (amounting to $251,617.25) based on the “pro rata time-on-the-risk” principle set
forth in Roberts, and is therefore liable to Heggie for an additional $86,010.53.
A separate Order follows.

Dated: September 14, 2017

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_______/s/___________
Richard D. Bennett
United States District Judge

This Court’s calculation is as follows:
426 insured days / 1,701 days of damages = 25.0 %
25.0% x $1,006,469.00 Underlying Judgment = $251,617.25 pro rata time-on-the-risk liability.

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