Local governments in Maryland may have an easier time getting their insurance companies to shield them from claims by property owners who are damaged by old landfills and other latent environmental hazards.
Maryland's Court of Appeals ruled last week in a suit filed by Harford County that insurance companies that provided protection from pollution claims under comprehensive general liability coverage might have to pay the cost of expenses incurred by its policy-holders for damages that occurred decades ago.
The unanimous opinion of the state's highest court, written by Chief Justice Robert C. Murphy, said insurers could be held responsible for damages that occur while policies are in effect, -- even if problems are not detected until after policies expire.
Harford County is seeking liability coverage from three companies for five landfills under policies it held from 1958 to 1982.
Fourteen Maryland jurisdictions -- including Anne Arundel, Carroll, Howard and Baltimore counties -- had filed supporting motions.
"This is a major step forward for policy-holder protection in the state of Maryland," said former U.S. Sen. Joseph D. Tydings, who argued the appellate case for Harford. "This restores coverage to businesses, counties and towns that purchased these policies during the '50s, '60s, '70s and early '80s."
The county filed a lawsuit in August 1990 in Harford County Circuit Court against Harford Mutual Insurance Co., the Home Insurance Co. and the Insurance Co. of North America (INA). The case was transferred to Baltimore County after insurance companies said they could not get a fair trial in Harford County.
The county carried comprehensive general liability coverage to protect it from millions of dollars of property damage claims from the operation of five sanitary landfills. It was insured by INA from 1958 to 1964; Harford Mutual 1965 to 1980, and Home Insurance 1980 to 1982.
Harford is seeking to recover at least $5 million in claims and cleanup costs for the landfills, said Catherine J. Serafin, another attorney for the county. She said the county also wants to recover money spent to defend itself against claims.
In 1982, after the last policy expired, the county discovered that pollutants from its landfills had leached into ground water, causing contamination to property owned by private residents and developers. A number of claims were filed against Harford. It then sued the insurance companies in 1990 to recover damages.
The Court of Appeals ruling establishes a precedent in Maryland for the period of the coverage in cases involving landfills and other facilities where damages could occur over a long period of time.
The case still must go back to Baltimore County Circuit Court, which has to decide other issues.
Insurance companies had argued before the appeals court that they should not be responsible for latent environmental problems because the value of the affected property does not drop until after the damage is discovered.
Albert J. Mezzanotte Jr., a lawyer for Harford Mutual, said that neither the insurers nor the county had anticipated the &r; environmental problems from leaching landfills when the policies were written. "We were not intended, in any way, shape or form, to provide coverage for those problems," he said.