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IN THE COURT OF APPEALS OF MARYLAND No. 56 September Term, 1997

PORTER HAYDEN COMPANY et al.

v.

BARBARA BULLINGER et al.

Bell, C.J. Eldridge Rodowsky Chasanow Raker Wilner Cathell, Dale R. (Specially assigned) JJ.

Opinion by Cathell, J. Rodowsky, J., concurs and dissents.

Filed: May 15, 1998

We granted the petition for writ of certiorari presented by Owens Corning Fiberglass Corporation (Owens Corning) and Porter Hayden Company (Porter Hayden), petitioners, to address three issues arising out of verdicts rendered against them in a consolidated asbestosrelated personal injury action in the Circuit Court for Baltimore City. The issues presented are: (1) whether the trial court had the authority to determine the application of co-defendant contribution claims when a federal court was to address the application of Maryland set-off principles in a pending federal class action proceeding involving the parties to the instant appeal; (2) whether the trial court erred in refusing to disclose to petitioners the amount in the settlement agreements negotiated between the plaintiffs and other joint tort-feasors; and (3) whether a default judgment constitutes a finding of liability for purposes of the application of section 3-1404 of the Courts and Judicial Proceedings Article. Because of our resolution of the second issue, it is unnecessary for us to address the first issue presented by petitioners. We shall also address the third issue.

I. FACTS This appeal requires us to examine two separate sets of facts that arose out of actions filed in different courts. The first set of facts involved two federal actions: one bankruptcy adjudication and one class action settlement. The second set involves the instant appeal. We shall discuss these facts separately.

A. The Federal Cases

In 1982, Johns-Manville Corporation (Johns-Manville), a manufacturer of asbestosrelated products, filed for bankruptcy primarily because of numerous asbestos-related claims brought against it. As a result of the Johns-Manville bankruptcy, the Manville Personal Injury Settlement Trust (Manville Trust) was created to compensate persons injured by asbestos-containing products manufactured by Johns-Manville. See In re Johns-Manville Corp., 68 B.R. 618 (S.D.N.Y. 1986), aff'd sub nom, Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988)(Manville I). In 1990, a class action for all of the Manville Trust beneficiaries, which included the parties in this case, was created to supersede all litigation pending against the trust in both federal and state courts. The class was created because it became apparent the trust was inadequately funded to compensate all possible beneficiaries. In 1991, a settlement regarding the distribution of Manville Trust funds was reached. See In re Joint E. & S. Dists. Asbestos Litig., 129 B.R. 710 (E.D.N.Y. & S.D.N.Y. 1991)(Manville II). The Court of Appeals for the Second Circuit, however, vacated approval of the settlement. See In re Joint E. & S. Dists. Asbestos Litig., 982 F.2d 721 (2d Cir. 1992)(Manville III). Following the remand, the Trust Beneficiaries again reached a settlement. Pursuant to this settlement agreement, the Manville Trust was recapitalized and all claims against the Trust were to be removed from the various tort systems and processed according to administrative procedures called the Trust Distribution Process (TDP). Pursuant to the TDP, numerous categories of diseases resulting from exposure to asbestos were created and a

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monetary value placed on each category of disease. The TDP also enumerated the methods by which a co-defendant's set-off would be calculated in litigation involving the Trust Beneficiaries. The Stipulation of Settlement, however, explicitly excluded claims arising in Maryland with respect to the appropriate set-off provisions. The Stipulation of Settlement provided: Section H.3 of the TDP, which deals with calculation of set-off, shall not apply by operation of this Stipulation with respect to asbestos health claims arising under Maryland law. The parties consent to trial by the Courts of the issue of appropriate set-off rules that should be developed with respect to Manville or the Trust in connection with claims arising under Maryland law .... In re Joint E. & S. Dists. Asbestos Litig., 878 F. Supp. 473, 578 (E.D.N.Y. & S.D.N.Y. 1995)(Manville IV). The Court of Appeals for the Second Circuit vacated the lower court's approval of the settlement with respect to the Maryland set-off issue. It stated that by refusing to resolve the disagreement as to the Maryland set-off issue, the trial court "abstained from deciding the issue left unresolved by the Settlement." In re Joint E. & S. Dists. Asbestos Litig., 78 F.3d 764, 775 (2d Cir. 1996)(Manville V). The court held such an abstention was inappropriate and remanded the case back to the district court for a determination of the Maryland set-off issue. On remand the federal district court, attempting to predict what the Maryland Court of Appeals would decide if faced with the Maryland set-off issue, held that in determining the appropriate set-off, the courts were to "exclude the Trust from calculations of other -3-

settling defendants' pro rata shares, and . . . credit amounts settled by the Trust to joint tortfeasors who have not settled." In re Joint E. & S. Dists. Asbestos Litig., 929 F. Supp. 1, 9 (E.D.N.Y. & S.D.N.Y. 1996)(Manville VI). The federal district court, however, rendered this judgment on 10 June 1996, after the Maryland trial court rendered its judgment from which the instant appeal arose. B. The Instant Appeal Nick Zumas, Patrick McCaffery, John Grimshaw, Ethel Marie Granski, Casimir Balonis, and Frank Krueger each filed suit in the Circuit Court for Baltimore City against petitioners and numerous other defendants, each alleging that exposure to products manufactured by petitioners caused him or her to contract asbestos-related mesothelioma. The cases were consolidated for trial by an order dated 3 April 1995. Porter Hayden filed a third-party contribution claim against Babcock & Wilcox (B & W) on 24 April 1995. After B & W failed to file an answer and respond to discovery requests, Porter Hayden moved for default. Porter Hayden's default motion was granted on its third-party complaint against B & W, and the court entered an order of default in favor of Porter Hayden. The court ultimately entered a default judgment against B & W on 30 August 1995. On 21 December 1995, the jury returned verdicts in favor of the plaintiffs in the Zumas, McCaffery, Grimshaw, and Granski cases. In order to reduce the verdicts to judgment, the plaintiffs provided information to the trial court for in camera consideration

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regarding settlements with the Manville Trust and with other settling joint tort-feasors.1 Both petitioners sought to obtain this settlement information in order to understand and calculate the final judgment amounts. The court denied their requests and rendered final judgments on 13 March 1996, without affording petitioners an opportunity to examine this settlement information. In rendering the final judgments and accounting for the Manville Trust, the trial court considered the trust a joint tort-feasor but, unlike the federal court, granted a pro tanto reduction in the verdicts rendered against petitioners. Owens Corning appealed to the Court of Special Appeals from the judgments rendered against it and in favor of the McCaffery, Zumas, Grimshaw, and Granski plaintiffs. Porter Hayden appealed only from the verdict rendered in the Grimshaw case. The Court of Special Appeals affirmed the judgment of the trial court. As to whether the trial court had authority to reduce the verdicts to judgment despite the pending federal class action, the appellate court held the circuit court "had fundamental jurisdiction to adjust compensatory damages and issue a final judgment in the instant cases." Anchor Packing Co. v. Grimshaw, 115 Md. App. 134, 173, 692 A.2d. 5, 24 (1997). The Court of Special Appeals also held the amounts of the settlement agreements properly were withheld from petitioners. With respect to the default judgment entered against B & W, the court held the trial court

The docket entries reflect that plaintiffs' counsel informed the court of all release/settlement agreements and whether the amounts paid by the settling joint tort-feasors exceeded the statutory pro-rata share.

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lacked the authority to "reduce Porter Hayden's pro rata share of the judgment because it was not established that B & W was a joint tort-feasor." Id. at 185, 692 A.2d at 30. We issued a writ of certiorari to address the three issues presented by petitioners. Prior to oral argument, this Court was informed that Owens Corning settled with plaintiffs McCaffery and Zumas. Accordingly, Owens Corning appeals only from the verdicts rendered against it in the Grimshaw and Granski cases. Porter Hayden still appeals only from the judgment rendered in the Grimshaw case. Barbara Bullinger is the personal representative of the Grimshaw estate. We shall refer to Bullinger and Granski collectively as respondents. In respect to the second issue, we hold the trial court erred in refusing to allow petitioners to inspect the amounts of the settlement agreements and we vacate the trial court's judgment as to the apportionment of liability. With regard to Porter Hayden's third issue, we hold that a default judgment constitutes a finding of liability for purposes of the application of section 3-1404 of the Courts and Judicial Proceedings Article.2 Because we are vacating the trial court's apportionment of the damages among the joint tort-feasors in the Grimshaw and Granski cases, the federal court's apportionment decision in Manville VI, supra, will predate the apportionment determination to be made by the circuit court on

The Maryland Contribution Among Joint-Tortfeasors Act was recodified from Article 50 of the Maryland Code to the Courts and Judicial Proceedings Article. See 1997 Md. Laws, ch. 31. The Revisor's Note to section 3-1401 provides: "[T]his Act may not be interpreted to render any substantive change to the Laws of Maryland." We shall cite to the Act as codified in the Courts and Judicial Proceedings Article.

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remand. The trial court must then apply the preclusive effect of, what at that time will be the prior, federal court action in Manville VI. We explain. II. THE DISCLOSURE OF SETTLEMENT AGREEMENTS The scope of discovery under Maryland law is very broad. The pertinent discovery rule states: (a) Generally. -- A party may obtain discovery regarding any matter, not privileged, including the existence, description, nature, custody, condition, and location of any documents or other tangible things . . . if the matter sought is relevant to the subject matter involved in the action . . . . It is not ground for objection that the information sought is already known to or otherwise obtainable by the party seeking discovery or that the information will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence. Md. Rule 2-402(a). We have noted that the purpose of the discovery rules is to require the disclosure of facts by a party litigant to all of his adversaries, and thereby to eliminate, as far as possible, the necessity of any party to litigation going to trial in a confused or muddled state of mind, concerning the facts that gave rise to the litigation. If all of the parties have knowledge of all of the relevant, pertinent and non-privileged facts, or the knowledge of the existence or whereabouts of such facts, the parties should be able properly to prepare their claims and defenses, thereby advancing the sound and expeditious administration of justice. Baltimore Transit Co. v. Mezzanotti, 227 Md. 8, 13, 174 A.2d 768, 771 (1961); see also Berrain v. Katzen, 331 Md. 693, 697, 629 A.2d 707, 708-09 (1993); Androutsos v. Fairfax Hosp., 323 Md. 634, 638, 594 A.2d 574, 576 (1991); Kelch v. Mass Transit Admin., 287 Md. 223, 229, 411 A.2d 449, 453 (1980); Williams v. Moran, 248 Md. 279, 291, 236 A.2d 274, 281-82 (1967). -7-

The discovery rules are broad in scope and are construed liberally to accomplish their purpose. Berrain, 331 Md. at 697, 629 A.2d at 709; Androutsos, 323 Md. at 638, 594 A.2d at 576; Kelch, 287 Md. at 229, 411 A.2d at 453; Mezzanotti, 227 Md. at 13, 174 A.2d at 771. Under the general discovery rule, a party may obtain discovery of information that is relevant and not privileged. Privileges prohibiting or limiting the introduction of evidence are created by the United States Constitution, the Maryland Constitution, statutes, and common law. The Fifth Amendment of the United States Constitution and Article 22 of the Maryland Declaration of Rights protect against compulsory self-incrimination. Evans v. State, 333 Md. 660, 682, 637 A.2d 117, 128, cert. denied, 513 U.S. 833, 115 S. Ct. 109, 130 L. Ed. 2d. 56 (1994); Choi v. State, 316 Md. 529, 535, 560 A.2d 1108, 1111 (1989); Lodowski v. State, 307 Md. 233, 246-47, 513 A.2d 299, 306-07, cert. denied, 475 U.S. 1086, 106 S. Ct. 1469, 89 L. Ed. 2d. 725 (1986). There are also numerous Maryland statutory privileges. See Md. Code (1974, 1995 Repl. Vol., 1997 Supp.),

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