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Rourke v. Amchem Products
State: Maryland
Court: Court of Appeals
Docket No: 1601/02
Case Date: 11/04/2003
Preview:REPORTED

IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1601 September Term, 2002

EDNA O. ROURKE, ET AL. v. AMCHEM PRODUCTS, INC., ET AL.

Hollander, Eyler, James R., Adkins, JJ.

Opinion by Adkins, J.

Filed: November 4, 2003

In

this

appeal, question

a

class

of

asbestos-injured Court for

plaintiffs City's

(appellants)

the

Circuit

Baltimore

interpretation of a post-settlement communication by appellees, its impact on the arbitration clause in the settlement agreement, and the court's finding that arbitration is the proper forum for resolution of the underlying dispute. The underlying dispute turns on the issue of whether the Center for Claims Resolution and its Producer Members (appellees) were liable to pay the settlement share agreed to by a co-defendant, who has defaulted, in addition to their own shares. seldom-seen doctrine Appellants creatively seek to employ a of questionable efficacy in Maryland -

offensive non-mutual collateral estoppel - to avoid litigating the arbitrability issue. Finally, appellees question whether the

issues are ripe for this Court's review. Specifically, the issues before us, in the order in which we will address them, are: I. Did the circuit court enter a final judgment on these claims when it ordered the plaintiffs/appellants to binding arbitration with some, but not all, of the defendants/appellees? If not, does this case satisfy any of the exceptions to the Final Judgment Rule? Should this Court apply offensive nonmutual collateral estoppel where the issues were litigated in a foreign jurisdiction?

II.

III. Did the trial court err when it granted appellees' motion to compel arbitration after finding that a letter sent subsequent to formation of the Master Settlement Agreement did not modify the

arbitration clause in Paragraph 7 of the MSA? For the reasons set out below, we hold that jurisdiction is proper in this Court, and offensive non-mutual collateral estoppel is not appropriately employed in this case. We affirm the circuit

court's ruling granting the motion to compel arbitration. FACTS AND LEGAL PROCEEDINGS In September 1988, a consortium of asbestos-related claims defendants entered into an agreement, the "Producer Agreement Concerning Center for Claims Resolution" (Producer Agreement), to establish a non-profit, non-stock Delaware corporation, the Center for Claims Resolution (CCR), to act as a claims handling facility. CCR was organized in October 1988. On April 20, 2000, 882 plaintiffs having asbestos-related personal injury and wrongful death claims pending in the Circuit Court for Baltimore City entered into a Master Settlement Agreement (MSA) with CCR. It also provided that under the MSA, individual

plaintiffs receive monetary payments in consideration for executing releases relinquishing their right to bring tort claims against CCR members. Each plaintiff receiving more than the smallest

settlement amount would receive a specified lump-sum amount in three unequal installments. settlement amount would be Plaintiffs entitled to the smallest paid in full from the first CCR

installment check. $4,500,000.00 be

The MSA specified that the first payment of made on July 2 1, 2000; a second payment of

$4,000,000.00 be made on June 1, 2001; and a third payment of any and all remaining amounts on September 1, 2002. Under the

agreement, "each CCR member company shall be liable . . . only for its individual share of such payments[.]" (Emphasis added.) If

any company failed to pay its share, appellants had the opportunity to either (i) void the settlement in its entirety, or (ii) pursue the defaulting company based on its original tort claim. The

agreement called for resolution of "any disputes that may arise while carrying out the terms and conditions of this Agreement" through a process of binding arbitration. (Emphasis added.)

On October 5, 2000, CCR tendered a check for $3,822,501.41 as payment in full of the first installment. CCR explained that the

amount represented the $4.5 million due, less the amount owed by a defaulting Producer Member, Asbestos Claims Management Corporation (ACMC). ACMC filed for protection under federal bankruptcy laws in June 2000, and its membership in CCR was consequently terminated under the terms of the Producer Agreement. On October 10, 2000, appellants' counsel sent a letter to CCR's chief operating officer, Michael F. Rooney, in which

appellants requested "an accounting as to the ACMC portion of the gross settlement for each . . . client." He explained:

The funds will be distributed as clients ratify the CCR settlement agreement, with the understanding that we will diligently pursue our legal remedies to collect the unpaid balance of the settlement. In those 3

situations where individual clients elect to "opt out" of the settlement because of ACMC's default, the settlement funds will be returned to you. Rooney responded to appellants by letter dated October 31, 2000 (Rooney letter). This letter said:

Each settling plaintiff will execute a release to the CCR for the full amount of the settlement prior to receiving the first installment; however, it is specifically understood and agreed that these releases are not evidence of full satisfaction of the contractual obligation of the CCR to pay the qualified plaintiffs the settlement values that have been agreed upon, and should the CCR fail to timely make any or all of the payments required by the Master Settlement Agreement, then in that event each settling plaintiff who has not received full payment may pursue a remedy in contract against the CCR members for any deficiency. If such action is required, the CCR members shall be responsible to pay the deficiency with interest at 8% per annum, and the CCR members will reimburse each such settling plaintiff for reasonable attorneys' fees and expenses that may be required to collect this deficiency by lawsuit or otherwise. This remedy in contract on the release will be the sole legal remedy of each plaintiff who has executed a release for the full consideration of his settlement but fails to receive timely payment in full, with the exception of those plaintiffs who elect to renunciate the settlement because of the ACMC non-payment before accepting the first settlement installment payment. Appellants contend that the Rooney letter modified the MSA by (1) rendering the appellees jointly and severally liable for the full settlement amount, including ACMC's share; and (2) granting

4

claimants a right to sue in court to enforce the MSA release agreements against CCR members for any deficiency in payment, thus abandoning the agreement to arbitrate "any disputes" set forth in the MSA. On March 7, 2002, appellants filed an action in the Circuit Court for Baltimore City against CCR and twelve named Producer Members of CCR, seeking declaratory relief and specific performance to enforce payment of the deficiency amount. Appellees removed the action to the United States District Court for the District of Maryland, which subsequently remanded the case back to the circuit court. On April 5, 2002, appellees moved to compel arbitration

between appellants and the twelve remaining Producer Members, and then to dismiss the action against CCR under Md. Rule 2-322(b)(2). After a hearing, the circuit court ruled that the Rooney letter did not modify the arbitration clause of the MSA. The court then

granted the Motion to Compel Arbitration and stayed all proceedings involving issues subject to arbitration. Appellants appealed the trial court's Order to Compel

Arbitration to this Court.

CCR filed a Motion to Dismiss the

Appeal on the ground that the order staying appellants' claim against CCR did not certify the case for interlocutory appeal, and did not otherwise constitute a final, appealable judgment. This

Court denied that motion without prejudice to the jurisdictional issues raised.

5

DISCUSSION I. Appellate Jurisdiction Appellees argue that this Court lacks appellate jurisdiction because the circuit court's order does not dispose of all claims against all parties and, consequently, it is not a final judgment from which appeal may be taken. When the trial court granted

appellees' motion to compel arbitration, it stayed the motion to dismiss the claim against CCR. Appellees, therefore, contend that

the order to arbitrate is not an appealable final judgment because the claim against CCR remains before the trial court. Additionally, appellees posit that appellate review under the collateral order doctrine is inapplicable because the trial court's order compelling arbitration is closely linked to the merits, and because it is not effectively unreviewable on appeal. Lastly, appellees argue that this case is not appropriate for certification under Md. Rule 8-602(e) because this Court lacks the benefit of a written decision by the trial court as to why certification is appropriate, because judicial economy and the policy against piecemeal appeals caution against certification, and because appellants have not shown that they will be permanently deprived of appeal rights if they must wait to file an appeal until the claims against CCR are resolved. In reply, appellants contend that a trial court's decision whether to grant or deny a motion to compel arbitration, or to stay 6

arbitration,

is

immediately

appealable.

They

cite

Town

of

Chesapeake Beach v. Pessoa Constr. Co., 330 Md. 744 (1993), as controlling authority allowing an immediate appeal of an order denying a petition for a stay of arbitration. In this context,

appellants argue, an order compelling arbitration is equivalent to, and has the same net effect, as an order denying a petition to stay arbitration. Therefore, Chesapeake Beach is on point.

Arguing in the alternative, appellants assert that the order satisfies the criteria for appeal under either the collateral order doctrine or via certification by this Court under Rule 8-

602(e)(1)(C).

We need not reach these arguments because we hold

that the circuit court's grant of appellees' motion to compel arbitration constituted an appealable final judgment. A. Final Judgment Rule Generally, a party may appeal only from a final judgment entered in a civil or criminal case by a circuit court. Code See Md.

(1974, 2002 Repl. Vol.)
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