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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ATLANTIC CRANE SERVICE, INC. t/a EASTERN CRANE SERVICE v. S.G. MARINO CRANE SERVICE, INC., ET AL. * * * * * * * *****

Civil No. JFM-99-2681

MEMORANDUM This is an action instituted by plaintiff Atlantic Crane Service, Inc. t/a Eastern Crane Service ("Eastern Crane") for declaratory relief arising out of a crane accident that occurred on June 9, 1999 in Sparrows Point, Maryland. Defendant Royal Insurance Company of America ("Royal"), Eastern Crane's excess liability insurer, has moved for summary judgment in its favor. Plaintiff Eastern Crane and defendants W.O. Grubb Steel Erection, Inc. ("W.O. Grubb"), S.G. Marino Crane Service, Inc. ("Marino Crane"), and Bethlehem Steel Corporation ("Bethlehem Steel") have filed oppositions to Royal's motion. Royal's motion for summary judgment will be granted. I. Eastern Crane held an excess commercial catastrophe liability policy from Royal. The policy was effective from September 1, 1998 through September 1, 1999 and covered: those sums in excess of the "retained limit" which the insured becomes legally obligated to pay as damages to which this insurance applies because of: (a) "Bodily injury" or "property damage" which occurs during the policy period and is caused by an "occurrence"; or (b) "Personal injury" or "advertising injury" caused by an offense committed during the policy period.

Def. Royal's Mot. Summ. J., Ex. A at R0015. Under this policy, Royal's umbrella coverage is only triggered when Eastern Crane's underlying primary coverage is exhausted. American Alliance Insurance Company ("American Alliance") issued Eastern Crane's primary policy, which has a $1,000,000 per-occurrence limit and a $2,000,000 aggregate limit. On June 9, 1999, an accident occurred at Bethlehem Steel when the boom on a crane provided to Eastern Crane by Marion Crane snapped as it was making a lift. The crane collapsed causing damage to the crane itself, the load being lifted, a second crane supplied by W.O. Grubb, and Bethlehem Steel's facilities. In addition, nearby workers suffered minor injuries. Claims have been asserted against Eastern Crane by Bethlehem Steel, Marino Crane, W.O. Grubb, the personal injury claimants, and the general contractor, Kvaerner Songer, Inc. Excluding the claims of W.O. Grubb and Marino Crane for damages caused to their cranes, the overlapping claims brought by Kvaerner Songer and Bethlehem Steel against Eastern Crane total $423,619, which includes approximately $12,000 for injuries suffered by the workers. Eastern Crane, in turn, has sought coverage under the insurance policies it held with The Security Insurance Company of Hartford, American Alliance, and its excess carrier, Royal. Since Eastern Crane has been denied coverage by or not received payment from its insurers, and it faced potential lawsuits in different jurisdictions, Eastern Crane filed a declaratory action to bring all interested parties within this jurisdiction. II. In a declaratory judgment action, an insurance carrier may appropriately move for summary judgment to determine whether it is obligated to provide coverage to an insured, where, as here, there are no material ambiguities in the policy. See Highlands Ins. Co. v. Gerber Prods. Co., 702 F. Supp. 2

109, 111 (D. Md. 1988). The pertinent language of the insurance policy between Eastern Crane and Royal excludes from coverage damage to "[p]roperty you use, own, rent or occupy." Def. Royal's Mot. Summ. J., Ex. A at R0017 (emphasis added). Eastern Crane signed equipment rental agreements with both W.O. Grubb and Marino Crane for use of the two cranes that were subsequently damaged. Eastern Crane argues that the rental exclusion applies only in situations where the insured is in actual physical possession of the equipment involved in the accident.1 For instance, in Dubay v. TransAmerica Ins. Co., 429 N.Y.S.2d 449 (N.Y. App. Div. 1980), the court did not apply the insurer's policy exclusion for rented property, despite the characterization of the agreement by the owner as a "rental," because under an oral agreement the crane owner provided the insured subcontractor with a crane and crew, both of which were always under the absolute control of the owner. Likewise, in Crane Serv. & Equip. Corp. v. United States Fidelity & Guar. Co., 496 N.E.2d 833 (Mass. App. Ct. 1986) the contractor's comprehensive general liability policy exclusion for property "rented to," "used by," and "in the care, custody or control of" the contractor was found inapplicable to damage done to the crane rented by the general contractor, where only the crane owner's employees drove, operated, fueled, maintained, or repaired the crane. Indeed, it is well settled that "[f]or purposes of the liability insurance exclusion [of rental property], it is the transfer of possession and control over property that is the key to determining whether the property has been leased to the insured." 9 Lee R. Rush & Thomas F. Segalla, Couch on Insurance

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Maryland Law