Estate of Adams v. Continental Insurance Co., 161 A.3d 70

Background

Between the late 1980s and 1994, thousands of asbestos claims against MCIC were consolidated (Abate I). MCIC and its insurers supplied fragmentary policy summaries (the “Nagle Documents”) and affidavits representing that roughly $12–13 million was the total remaining insurance coverage; the parties executed a global settlement in 1994.
The Nagle Documents contained standard CGL declaration pages distinguishing "products/completed operations" coverage (subject to aggregate limits) from other coverage (not explicitly aggregated). Plaintiffs accepted the settlement based on the insurers’ representations and affidavits that no other applicable coverage existed.
In 1997–1998 Maryland appellate authority (Commercial Union Ins. Co. v. Porter Hayden Co.) recognized that asbestos installation/operations claims could be covered as non-products claims not subject to aggregate limits, dramatically increasing potential insurer liability.
LOPA (one plaintiffs’ group) began pressing for additional coverage after Porter Hayden, commissioned the Gilbert report (May 1998) analyzing CGL policies, and later obtained internal MCIC/insurer documents (the Chapper Documents) in 2004. Several plaintiffs filed tort claims (negligent/fraudulent misrepresentation and concealment) in 2005 asserting the insurers misrepresented available coverage at settlement.
The circuit court granted summary judgment for insurers in 2012, holding plaintiffs’ tort claims were barred by the three-year statute of limitations because plaintiffs were on inquiry notice no later than Porter Hayden (1997) or, at the latest, the Gilbert report (May 1998). The Court of Special Appeals affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
When did the statute of limitations accrue for fraud/misrepresentation claims?	Limitations did not accrue until plaintiffs uncovered proof of intentional fraud (Chapper Documents); therefore claims filed in 2005 were timely.	Accrual began when plaintiffs had inquiry notice—knowledge of facts that would prompt a reasonable investigation—no later than Porter Hayden (1997) or Gilbert report (1998); claims filed in 2005 are time-barred.	Held: Accrual occurred by Porter Hayden (1997) and at latest May 1998; plaintiffs were on inquiry notice and claims are barred.
Must plaintiffs know defendants’ scienter to be on inquiry notice for fraud?	Plaintiffs say scienter (actual knowledge of falsity) was necessary to put them on inquiry notice.	Defendants say inquiry notice depends on knowledge of facts/injury, not proof of defendant’s mental state; reckless indifference suffices for fraud liability.	Held: Plaintiffs need not know defendants’ mental state; discovery of the misrepresentation and injury (post-Porter Hayden) sufficed to start the limitations period.
Did fraudulent concealment (CJP § 5-203) toll the limitations period?	Plaintiffs contend insurers’ alleged concealment should toll limitations until fraud was discovered.	Defendants argue plaintiffs had fragmentary policy materials and Porter Hayden put them on inquiry notice, so concealment did not prevent discovery of the claim.	Held: § 5-203 does not save the claims; plaintiffs were not prevented from discovering the wrong by defendant fraud for tolling purposes.
Was remand for discovery or a jury determination required on inquiry-notice/tolling?	Plaintiffs sought discovery and a jury to resolve factual disputes about concealment, receipt of documents, and notice.	Defendants argued there were no material fact disputes: Porter Hayden + Nagle documents/Gilbert report established inquiry notice as a matter of law.	Held: No remand required. Court found no genuine dispute of material fact; the limitations issue was decided as a matter of law in defendants’ favor.

Key Cases Cited

Commercial Union Ins. Co. v. Porter Hayden Co., 116 Md. App. 605 (Md. Ct. Spec. App.) (holding asbestos installation/operations claims can create non-products coverage and thus may avoid aggregate limits)
Lumsden v. Design Tech Builders, Inc., 358 Md. 435 (Md. 2000) (discovery rule/inquiry notice analysis; limitations runs when plaintiff knows of injury)
O'Hara v. Kovens, 305 Md. 280 (Md. 1986) (inquiry notice depends on whether circumstances would prompt investigation; scienter-focused claims may require awareness of state of mind)
Windesheim v. Larocca, 443 Md. 312 (Md. 2015) (signing/possession of documents can place plaintiff on inquiry notice of fraud)
Ellerin v. Fairfax Sav., F.S.B., 337 Md. 216 (Md. 1994) (fraud scienter can include reckless indifference; actual knowledge not always required)
Poffenberger v. Risser, 290 Md. 631 (Md. 1981) (establishing general applicability of discovery rule)