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Baltimore Gas and Electric Co. v. Commercial Union Insurance Co.2/4/1997
Opinion by Hollander, J.
In this case, we must decide whether an insurer's duty to defend its insured depends entirely upon the claims as originally asserted in the complaint, or whether the plaintiffs' revised allegations, during the course of litigation, may terminate the insurer's duty to defend. We also must determine if the insurer is obligated to indemnify its insured, and whether a subcontractor of the insured breached its contract to provide insurance for the insured.
In February 1991, Michael and Kathleen Corradetti filed suit against Jones Intercable, Inc. ("Jones") for personal injuries suffered after the couple's car fell into a utility pit ("the Corradetti suit"). They later amended their suit to include claims for negligence against Baltimore Gas and Electric Company ("BGE"), appellant, Ferguson Trenching Company ("Ferguson"), appellee, and others. Pursuant to a contract with BGE, Ferguson dug the pit into which Mr. Corradetti later drove his car. Ferguson was contractually obligated to obtain a general commercial liability insurance policy to protect both Ferguson and BGE, in connection with Ferguson's work for BGE. That policy, which is central to this dispute, was obtained from Commercial Union Insurance Company ("Commercial"), appellee, through Commercial's issuing company, American Employers Insurance Company ("American"), appellee.
Relying on the terms of the policy, Commercial declined to defend or indemnify BGE in the Corradetti suit. Thereafter, BGE instituted a declaratory action in the Circuit Court for Anne Arundel County, seeking a determination of its rights under the policy. After judgment was entered against BGE in the Corradetti suit, the circuit court granted appellees' motions for summary judgment in the declaratory action. It determined that Commercial did not have a duty to defend or indemnify BGE and that Ferguson did not breach its contractual obligation to provide BGE with insurance coverage. This appeal followed, in which BGE presents the following questions.
I. Did the circuit court err in granting Appellees' Motion for Summary Judgment on all issues relating to the indemnification and defense of BGE in the underlying Corradetti case?
II. Did the circuit court err in failing to grant Appellant's Motion for Partial Summary Judgment on all issues related to the indemnification and defense of BGE in the underlying Corradetti case?
For the reasons that follow, we shall affirm in part and reverse in part.
Factual Summary
In connection with BGE's installation of underground utilities in Anne Arundel County, BGE and Ferguson entered into a "blanket contract," which extended from June 1, 1989 to May 31, 1991. The agreement specifically required the insurance to cover "excavation" and "subsurface work," and provided that Ferguson assumed all risks of liability for injuries "arising out of or incident to the performance of the work." Further, the contract obligated Ferguson to maintain commercial general liability insurance for the benefit of BGE, listing BGE as an additional insured. Pursuant to the contract, in May 1990 Ferguson excavated the site in issue.
In accordance with the contract, Ferguson obtained insurance coverage from Commercial, through its issuing agent, American. Ferguson was the named insured on the policy, and an endorsement to the policy named BGE as an additional insured. Under the policy, however, BGE's coverage was limited by several exclusions, which restricted coverage to claims based on negligence by Ferguson and claims that BGE negligently failed to supervise Ferguson.
Between May 21 and May 23, 1990, Ferguson dug a "spli
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