Case Title: Hartford Mutual v. Woodfin

Citation: 344 Md. 399

Docket Number: 116/96

State: maryland

Court: Maryland Supreme Court

Date: 1997-01-14T00:00:00Z

Document:
No. 116, September Term, 1996
Harford Mutual Insurance Company v. Woodfin Equities Corp. et al.
[When A Declaratory Judgment Action Is Brought, And The Controversy
Is Appropriate For Resolution By A Declaratory Judgment, It Is
Error For The Trial Court To Dispose Of The Case Without Filing A
Declaration Of The Parties' Rights]
 
IN THE COURT OF APPEALS OF MARYLAND
No. 116
September Term, 1996
________________________________________
HARFORD MUTUAL INSURANCE COMPANY
v.
WOODFIN EQUITIES CORP. et al.
_______________________________________
Bell, C.J.,
Eldridge
Rodowsky
Chasanow
Karwacki
Raker, JJ.
________________________________________
Opinion by Eldridge, J.
________________________________________
       Filed:  January 14, 1997
The principal questions presented in this case concern
important coverage issues under a standard general liability
insurance policy.  Nevertheless, for reasons hereafter discussed,
we shall not at this time be able to reach the merits of those
insurance coverage issues.
I.
This litigation arises out of the construction of a hotel in
Rockville, Maryland, known as the Woodfin Suites Hotel.  The
plaintiffs Woodfin Equities Corporation and Samuel A. Hardage own
and operate the hotel.  The plaintiff Hardage Construction Company
was the general contractor which constructed the hotel.  Deerfield
Engineering, Inc., owned by Donald Paulgaard, was the subcontractor
which furnished and installed the hotel's heating, ventilation, and
air conditioning system ("HVAC" system).  Components of the HVAC
system were allegedly manufactured by The Trane Company and by
Climatemaster.
The construction of the hotel was completed in 1988, and the
hotel suites were opened for occupancy at different times during
that year.  The plaintiffs alleged that the HVAC units installed in
- 2 -
the hotel suites began to malfunction and fail in March 1988, and
that 130 of the 226 HVAC units had to be replaced as of June 1989.
According to the plaintiffs, thereafter the HVAC units continued to
fail at a rate of two per week.
In January 1990, the plaintiffs filed in the Circuit Court
for Montgomery County a multi-count complaint for damages against
The Trane Company, Climatemaster, and an entity designated as
"Deerfield, Incorporated."  "Deerfield, Incorporated" was alleged
to be the subcontractor which installed the HVAC system.  The
different counts in the complaint were based upon theories of
breach of contract, negligence, breach of express warranty, breach
of implied warranties, and strict tort liability for defective
products.  The money damages sought were for replacement or repair
of components of the defective HVAC units, consultant fees expended
to discover the causes of the failures in the HVAC units, repair of
damage to the hotel suites caused by replacement or repair of, or
water leaking from, the faulty HVAC units, loss of revenue from
suites (allegedly averaging 14 per month) which were not useable as
a result of the defective units, management time spent in customer
relations and in attempting to correct the problems, and loss of
goodwill.  The plaintiffs also requested attorneys' fees and
punitive damages.
The complaint in the 1990 action was served upon an existing
corporation named "Deerfield, Incorporated."  This corporation,
however, was not the same corporation as "Deerfield Engineering,
- 3 -
Inc.," which was the subcontractor that had installed the HVAC
system in the hotel.  In fact, there was no connection whatsoever
between "Deerfield, Incorporated" and the HVAC subcontractor
Deerfield Engineering.  An order of default was entered against
"Deerfield, Incorporated" in May 1992, and later a default judgment
for $168,102.84 was entered against "Deerfield, Incorporated."
This default judgment became final on February 21, 1995, upon the
dismissal of the action against Trane and Climatemaster.  See
Maryland Rule 2-602(a); Quartertime Video v. Hanna, 321 Md. 59, 580
A.2d 1073 (1990).
Sometime after the filing of the 1990 action, the plain-
tiffs apparently realized that the wrong "Deerfield" had been
served.  Consequently, in March 1991, the subcontractor Deerfield
Engineering and its owner, Donald Paulgaard, were served with the
pleadings in the 1990 lawsuit.  It appears that Deerfield Engineer-
ing was then insolvent, and neither Deerfield Engineering nor
Mr. Paulgaard filed an answer or any other pleading in the action.
Nevertheless, the testimony in the present case disclosed that
Mr. Paulgaard attended some of the trial court proceedings and
cooperated with the plaintiffs.
The plaintiffs in May 1994 discovered that a general
liability insurance policy had been issued by Harford Mutual
Insurance Company to Deerfield Engineering covering the period
during which the hotel had been constructed and the HVAC system
- 4 -
installed.  The "insured" is identified in the policy as follows:
"Deerfield Engineering
 
 Donald Marvin Paulgaard
 
 15 Dairyfield Court
 Rockville, Md. 20852."
The plaintiffs' counsel, in June 1994, wrote to Harford, enclosed
copies of the pleadings and orders in the 1990 lawsuit, offered to
have the default judgment (which was not then final) vacated, and
made a claim against the policy.  An officer in Harford's claims
department replied on June 30, 1994, stating that "there will be no
coverage available to Deerfield Engineering for this occurrence.
There are a number of coverage issues which contributed to this
decision."
After some further correspondence between the plaintiffs'
counsel and Harford, the plaintiffs on January 13, 1995, commenced
the present action by filing in the Circuit Court for Montgomery
County a complaint for a declaratory judgment against Harford.  The
plaintiffs sought a judgment declaring that insurance policy
coverage should be afforded Deerfield Engineering for the damages
incurred by the plaintiffs arising from Deerfield's installation of
the HVAC system in the hotel and declaring that Harford has a duty
to defend Deerfield Engineering in the action instituted in 1990.
Harford defended on various alternative grounds, including
the arguments that the defendant in the 1990 action was "Deerfield,
Incorporated," whereas Harford's insured was "Deerfield Engineer-
- 5 -
ing," that the plaintiffs may not bring a direct action against the
liability insurer of the defendant in the 1990 action because of
the "plaintiffs' failure to present evidence of any attempt to
execute upon the underlying [default] judgment," that Harford
failed to receive timely notice of the plaintiffs' claim thereby
justifying a denial of coverage, and that "the conduct and loss
alleged in the underlying litigation is not covered under the
Harford Mutual policy at issue."  With respect to the last
argument, Harford, after pointing out that the policy covers
"property damage" caused by an "occurrence," contended that the
injury or damages asserted in the underlying 1990 action were not
"encompassed within the policy definition of `property damage,'"
that even if there were `property damage' as defined in the policy,
it was not "caused by an `occurrence'" as that term is defined in
the policy, and that, assuming arguendo the existence of property
damage caused by an occurrence, "the conduct and damage at issue in
the underlying case" fell within certain policy exclusions.
Following a denial of Harford's motion for summary judgment,
the declaratory judgment action was tried nonjury in June 1995.
After the testimony of the plaintiffs' witnesses and the intro-
duction of documentary evidence, Harford moved for judgment.  At
the conclusion of arguments by counsel, the circuit judge orally
ruled from the bench that Harford had timely notice of the claim.
The judge did not expressly mention Harford's arguments that the
- 6 -
plaintiffs were not entitled to bring a declaratory judgment action
against the insurer because they had sued the wrong "Deerfield" in
1990 and because they had allegedly not attempted to execute on the
default judgment.  The judge, however, implicitly rejected these
arguments, taking the position that the policy coverage issues were
determinative.  The circuit judge then stated that a "careful
perusal of both [the policy and the complaint in the 1990 action]
persuades the Court that the coverage under the terms of the
[insurance] contract would not afford the plaintiffs in this matter
the coverage to which they have maintained they are entitled."  The
judge requested that counsel prepare and submit "an order."
Counsel for Harford initially submitted a six-page proposed
memorandum order which would have constituted a declaratory
judgment if the trial judge had signed it.  The plaintiffs'
counsel, however, objected to portions of the proposed memorandum
order, and the trial judge declined to sign the proposed order.
Subsequently, the trial judge simply signed a one-sentence order
stating that Harford's "Motion for Judgment pursuant to Maryland
Rule 2-519 . . . is GRANTED."
The plaintiffs appealed, and the Court of Special Appeals
affirmed in part, reversed in part, and remanded the case for
further proceedings.  Woodfin v. Harford Mutual, 110 Md. App. 616,
678 A.2d 116 (1996). 
With regard to Harford's argument that the plaintiffs lacked
- 7 -
standing to bring this declaratory judgment action against the
insurer because the plaintiffs' default judgment was against
"Deerfield, Incorporated - `a completely unrelated entity' . . .
[which] is not the `named insured' under the CGL policy," the Court
of Special Appeals stated that the "default judgment, although in
the name of Deerfield, Incorporated, is a valid judgment against
the insured."  Woodfin v. Harford Mutual, supra, 110 Md. App. at
635, 678 A.2d at 125.  After reviewing the facts, and specifically
pointing out that the insured Deerfield Engineering and its owner
Donald Paulgaard were served in 1991 with the pleadings in the
underlying suit and had notice, the Court of Special Appeals
concluded that this "is a case involving a mere `misnomer'" and
that, therefore, the insured and the insurer "could not legally
avoid the default judgment on the technical ground that the
judgment is in the incorrect name."  110 Md. App. at 637, 678 A.2d
at 126.
As to Harford's alternative standing argument, the Court of
Special Appeals said (110 Md. App. at 632, 678 A.2d at 123):  "We
agree with appellee that, before an injured party may sue an
insurer directly, the injured party must first obtain a judgment
against the insured and that judgment must be returned unsatisfied,
or the insured must refuse to pay it."  The Court of Special
Appeals relied on some of its prior cases, as well as on Maryland
- 8 -
       Art. 48A, § 481, provides as follows:
1
"§ 481.  Liability policy not to require     
           assured to pay loss; bankruptcy or
           insolvency not to release insurer;
           action against insurer.
"No liability insurance policy issued in
this State shall contain any requirement for
the payment of liability or loss under the
policy, by the assured, but all such policies
shall provide in substance that the bankruptcy
or insolvency of the assured shall not release
the insurer from liability; that if an execu-
tion upon any final judgment against the
assured is returned unsatisfied, in whole or
in part, in an action brought by the injured
or by another person claiming, by, through, or
under the injured, then an action may be
maintained by the injured, or by such other
person against the insurer under the terms of
the policy for the amount of any judgment
recovered in such action, not exceeding the
amount of the policy, and every such policy
shall be construed to so provide, anything in
such policy to the contrary notwithstanding."
Code (1957, 1994 Repl. Vol.), Art. 48A, § 481.   Although agreeing
1
with the legal principle put forward by the appellee Harford, the
intermediate appellate court "reject[ed] appellee's argument that
appellants lacked standing because they allegedly failed to enforce
the judgment."  110 Md. App. at 638, 678 A.2d at 126.  The
appellate court reviewed the evidence presented at trial disclosing
that the plaintiffs employed an investigator to search for the
insured's assets but that no assets were found, that the insured's
owner testified that all of the insured's assets had been disposed
of, and that the insured was insolvent.  The Court of Special
- 9 -
       Harford's argument was based on Art. 48A, § 482, which
2
states as follows:
"§ 482. Disclaimer of coverage because of lack
    of notice or cooperation from     
    insured.
"Where any insurer seeks to disclaim cover-
age on any policy of liability insurance
issued by it, on the ground that the insured
or anyone claiming the benefits of the policy
through the insured has breached the policy by
failing to cooperate with the insurer or by
not giving requisite notice to the insurer,
such disclaimer shall be effective only if the
insurer establishes, by a preponderance of
affirmative evidence that such lack of cooper-
ation or notice has resulted in actual preju-
dice to the insurer."
Appeals concluded (ibid.):
"This evidence of total insolvency, in our
view, is sufficient to satisfy the requirement
that the judgment against the insured must be
returned unsatisfied, or that the insured must
refuse to pay it, before the injured party may
directly sue the insurer."
The Court of Special Appeals also rejected Harford's
contention that the insurer was prejudiced by lack of timely
notice, stating (110 Md. App. at 655, 678 A.2d at 135):
"Upon our review of the record, we hold that
the circuit court was not clearly erroneous in
determining that appellee was not prejudiced
by the insured's failure to notify the insurer
of appellants' claim or by its alleged failure
to cooperate with appellee with respect to the
claim."2
- 10 -
       In connection with this issue, see this Court's recent
3
opinions in Sheets v. Brethren Mutual, 342 Md. 634, 640 n.2, 679
A.2d 540, 542 n.2 (1996), and Aetna v. Cochran, 337 Md. 98, 107-
112, 651 A.2d 859, 863-866 (1995).
In addition, the Court of Special Appeals disagreed with the
plaintiffs' argument that the circuit court based its decision of
no coverage solely upon the complaint in the 1990 lawsuit and the
provisions of the insurance policy, and that the court ignored the
evidence adduced at trial.  After reviewing the trial transcript,
the intermediate appellate court held that it was "satisfied that
the circuit court considered the evidence produced at trial in
granting appellee's motion for judgment."  110 Md. App. at 647, 678
A.2d at 130-131.3
Turning to the merits of the coverage issues, the Court of
Special Appeals expressed agreement with the plaintiffs' argument
that the damaged and defective HVAC system constituted "property
damage" as defined in the general liability policy issued to
Deerfield Engineering.  110 Md. App. at 648, 678 A.2d at 131.
Nevertheless, the intermediate appellate court held that this
property damage was not caused by an "occurrence" within the
meaning of the policy, stating (ibid.):
"Courts uniformly hold that when property
damage arising out of the insured's defective
workmanship is confined to the insured's own
work product, the damage is not caused by an
`occurrence' within the meaning of the CGL
policy.
- 11 -
* * *
"In light of the contract between appellants
and the insured, there can be no doubt that
the HVAC system, whether considered as a whole
or in terms of its various component parts, is
the work product of the insured."
Alternatively, the appellate court held that even if the damage to
the HVAC system were within the policy's coverage provisions, such
damage would fall within an exclusion for "`property damage to the
named insured's products'" which include "`goods or products
manufactured, sold, handled or distributed by the named insured.'"
110 Md. App. at 650, 678 A.2d at 132.  Consequently, the Court of
Special Appeals held that the plaintiffs are not entitled to
recover under the policy for the costs of replacing or repairing
components of the HVAC system, "for costs associated with tearing
out walls, molding, and carpeting in order to repair and remove the
HVAC units," and "for the economic costs of paying consultants, or
the economic costs associated with loss of management time."  110
Md. App. at 649, 678 A.2d at 131-132.
On the other hand, the Court of Special Appeals held that
the "loss of use of the guest suites . . . is `property damage'
caused by an `occurrence' under the CGL policy," that such loss is
not within any of the policy exclusions, and that Harford "is
obligated to cover the `damages' associated with the loss of use of
the guest suites."  110 Md. App. at 652, 678 A.2d at 133.
Harford filed in this Court a petition for a writ of
- 12 -
       The plaintiffs did not raise in their certiorari petition
4
the argument, made in the Court of Special Appeals, that the
circuit court, in rendering its decision on policy coverage,
ignored the evidence at trial.  Therefore this issue is not before
us.  See Maryland Rule 8-131(b)(1).
certiorari, presenting the same standing, notice, and coverage
issues which it had raised in the two courts below.  While agreeing
with some of the Court of Special Appeals' rulings on the merits of
the coverage issues, Harford specifically challenged the inter-
mediate appellate court's holding that there was policy coverage
for loss of use of the guest suites.  The plaintiffs filed a cross-
petition for a writ of certiorari, presenting the single question
of 
"[w]hether the Court of Special Appeals erred
in determining that plaintiffs' damages to the
hotel structure and its heating, air condi-
tioning and ventilation system were not cov-
ered by defendant's general liability insur-
ance policy."4
II.
This Court has granted both the petition and the cross-
petition for a writ of certiorari.  We shall summarily affirm in
part and reverse in part the judgment of the Court of Special
Appeals.
A.
For the reasons delineated in the opinion of the Court of
Special Appeals, we agree that the circuit court did not err in
finding that Harford suffered no prejudice by an alleged lack of
- 13 -
       See footnote 1, supra.
5
timely notice.  Similarly, we agree with the Court of Special
Appeals that the default judgment against "Deerfield, Incorporated"
involved simply a misnomer situation, and that Harford cannot avoid
the consequences of that judgment on the theory that the judgment
is not technically in the name of Harford's insured, Deerfield
Engineering.  See McSwain v. Tri-State Transportation, 301 Md. 363,
369-371, 483 A.2d 43, 46-47 (1984); Dart Drug Corp. v. Hechinger
Co., 272 Md. 15, 28-29, 320 A.2d 266, 273-274 (1974); W. U. Tel.
Co. v. State, Use of Nelson, 82 Md. 293, 306-308, 33 A. 763, 764
(1896); First National Bank v. Jaggers, 31 Md. 38, 46-48 (1869).
See also Greentree v. Fertitta, 338 Md. 621, 625 n.5, 659 A.2d
1325, 1327 n.5 (1995).
B.
We also agree with the decision of the Court of Special
Appeals that the plaintiffs had standing to bring this declaratory
judgment action against the liability insurer of one of the
defendants in the underlying litigation.  We disagree, however,
with the legal principle advanced by Harford and accepted by the
intermediate appellate court, and we disagree with the reasoning of
that court.
Relying upon Art. 48A, § 481,  Harford maintains that an
5
injured party may never bring a declaratory judgment or other
action against the liability insurer of the person or entity
- 14 -
causing the injury until "the injured party has (1) already
obtained a judgment against the defendant/insured and (2) the
judgment 
has 
been 
returned 
unsatisfied 
after 
execution."
(Harford's certiorari petition at 18, emphasis in original).  The
Court of Special Appeals in the present case essentially agreed
with this principle, relying upon its earlier opinion in Butler v.
Liberty Mut. Ins. Co., 36 Md. App. 684, 375 A.2d 576 (1977).
Harford's argument, as well as the view taken by the Court of
Special Appeals in the present case and in Butler v. Liberty Mut.
Ins. Co., supra, are directly inconsistent with the opinions of
this Court.
With regard to Art. 48A, § 481, this Court has held that
"[t]he statute . . . does not purport to set forth the earliest
time under Maryland law when a direct action may be maintained by
the injured tort claimant against the defendant's liability
insurer."  Washington Transit v. Queen, 324 Md. 326, 332 n.4, 597
A.2d 423, 425 n.4 (1991).  See also Bass v. Standard Acc. Ins. Co.,
70 F.2d 86, 87-88 (4th Cir. 1934).  The purpose of § 481, as shown
by its plain language, was to prevent liability insurance companies
from imposing certain requirements and relying upon certain
defenses.
As illustrated by our decisions, the principles regarding
the circumstances under which direct actions can and cannot be
brought against liability insurers, prior to the time when final
- 15 -
judgments against insureds have been returned unsatisfied, have
developed as a matter of case law.  The controlling principle has
been that public policy frowns upon the injection of liability
insurance in legal proceedings at which the insured defendant's
underlying tort liability is being determined; the "matter of
liability insurance is irrelevant to the issue of the defendant's
liability and is highly prejudicial."  Washington Transit v. Queen,
supra, 324 Md. at 332-333, 597 A.2d at 426, quoting Morris v.
Weddington, 320 Md. 674, 680, 579 A.2d 762, 765 (1990).  See, e.g.,
Allstate Ins. Co. v. Atwood, 319 Md. 247, 257-259, 264-265, 572
A.2d 154, 159, 162-163 (1990); McCormick v. Church, 219 Md. 422,
430-431, 149 A.2d 768, 773-774 (1959).
Consequently, we have sanctioned "declaratory judgment
actions by or against the tortfeasor's liability insurer, in
advance of a determination of liability in a tort suit, . . . when
the issues in the declaratory judgment action are independent and
separable from the claims of the tort claimant," Washington Transit
v. Queen, supra, 324 Md. at 333 n.6, 597 A.2d at 426 n.6.  Valliere
v. Allstate Ins. Co., 324 Md. 139, 596 A.2d 636 (1991), involved a
situation quite similar to that in the present case.  In Valliere,
while a tort suit was pending, the tort plaintiff brought a
separate declaratory judgment action against the tort defendant's
liability insurer to determine whether coverage existed under the
terms of the liability insurance policy; this Court resolved the
- 16 -
policy coverage issues on the merits, holding that the plaintiff
was entitled to a declaratory judgment in her favor.  See also,
e.g., Van Horn v. Atlantic Mutual, 334 Md. 669, 672-673, 641 A.2d
195, 196-197 (1994) (declaratory judgment action to determine
policy coverage, at which both the injured claimant and the
tortfeasor's liability insurer were parties, brought prior to the
filing of any underlying tort suit); Bankers & Ship. Ins. v.
Electro Enter., 287 Md. 641, 644, 415 A.2d 278, 280 (1980)
(declaratory judgment action concerning insurance policy coverage
for tort claims, at which both the injured tort plaintiffs and the
defendant's liability insurer were parties, brought shortly after
the underlying tort action was filed).
Maryland public policy ordinarily does preclude an injured
claimant from initially bringing a direct action against the
alleged tortfeasor's liability insurer to litigate the matter of
the insured's tort liability, as distinguished from a declaratory
judgment action concerning separate and independent policy coverage
issues.  Nevertheless, even in an action by the injured claimant
against the tortfeasor to determine the latter's tort liability,
the defendant tortfeasor's liability insurer may become a party
"after the jury's verdict or judge's decision on liability is
rendered" and "the tort judgment [is] nonfinal," Allstate Ins. Co.
v. Atwood, supra, 319 Md. at 264, 572 A.2d at 162.  Contrary to the
position of Harford and the Court of Special Appeals, the Maryland
- 17 -
       It is noteworthy that, in the instant case, there was no
6
final judgment against the insured until after the present
declaratory judgment action was filed.  Thus, if the legal
principle applied by the Court of Special Appeals to this issue
were correct, the plaintiffs were not entitled to file the
declaratory judgment action when they did. 
restriction upon direct actions against a defendant tortfeasor's
liability insurer applies only "until there has been a determina-
tion of the insured's liability in the tort action.  Once there is
a verdict or judgment in the tort action, a direct action may be
maintained against the liability insurer."  Washington Transit v.
Queen, supra, 324 Md. at 332, 597 A.2d at 426.
Therefore, it is not necessary that there be a final
judgment against an insured tortfeasor, much less an execution on
the judgment, before an injured claimant may bring an action
against the tortfeasor's liability insurer.   Moreover, prior to
6
any determination in the underlying tort case, the injured claimant
ordinarily may bring a declaratory judgment action against the
tortfeasor's liability insurer to resolve insurance policy coverage
disputes which are separate and independent from the liability
issues in the underlying litigation.  In light of these principles,
the plaintiffs in the case at bar clearly had standing to maintain
this declaratory judgment action against Harford.
C.
The opinion of the Court of Special Appeals with respect to
the merits of the insurance policy coverage issues, and the
- 18 -
certiorari petitions filed by both sides, fail to consider that
this was a declaratory judgment action and that the circuit court
did not render a declaratory judgment.
This Court has reiterated time after time that, when a
declaratory judgment action is brought, and the controversy is
appropriate for resolution by declaratory judgment, "the trial
court must render a declaratory judgment."  Christ v. Department,
335 Md. 427, 435, 644 A.2d 34, 38 (1994).  "[W]here a party
requests a declaratory judgment, it is error for a trial court to
dispose of the case simply with oral rulings and a grant of . . .
judgment in favor of the prevailing party."  Ashton v. Brown, 339
Md. 70, 87, 660 A.2d 447, 455 (1995), and cases there cited.
The fact that the side which requested the declaratory
judgment did not prevail in the circuit court does not render a
written declaration of the parties' rights unnecessary.  As this
Court stated many years ago, "whether a declaratory judgment action
is decided for or against the plaintiff, there should be a
declaration in the judgment or decree defining the rights of the
parties under the issues made."  Case v. Comptroller, 219 Md. 282,
288, 149 A.2d 6, 9 (1959).  See also, e.g., Christ v. Department,
supra, 335 Md. at 435-436, 644 A.2d at 38 ("[t]he court's rejection
of the plaintiff's position on the merits furnishes no ground for"
failure to file a declaratory judgment); Broadwater v. State, 303
Md. 461, 467, 494 A.2d 934, 937 (1985) ("the trial judge should
- 19 -
have declared the rights of the parties even if such declaration
might be contrary to the desires of the plaintiff"); East v.
Gilchrist, 293 Md. 453, 461 n.3, 445 A.2d 343, 347 n.3 (1982)
("where a plaintiff seeks a declaratory judgment . . . , and the
court's conclusion . . . is exactly opposite from the plaintiff's
contention, nevertheless the court must, under the plaintiff's
prayer for relief, issue a declaratory judgment"); Shapiro v.
County Comm., 219 Md. 298, 302-303, 149 A.2d 396, 399 (1959) ("even
though the plaintiff may be on the losing side of the dispute, if
he states the existence of a controversy which should be settled,
he states a cause of suit for a declaratory decree"). 
The circuit court's judgment in this case, insofar as it
related to the merits of the insurance policy coverage issues,
should have been vacated by the Court of Special Appeals for
failure of the circuit court to file a written declaration with
regard to the disputed coverage issues.  The intermediate appellate
court should not have reached the merits of those coverage issues,
and we shall not do so.  We reverse that portion of the Court of
Special Appeals' judgment relating to the merits of the policy
coverage issues and relating to the instructions for the circuit
court upon remand.
Upon remand, the circuit court should render a written
declaratory judgment on the merits of the disputed insurance policy
coverage issues.  We note that, if an appeal is taken from the
- 20 -
circuit court's declaratory judgment, any party is entitled to file
in this Court a petition for a writ of certiorari prior to briefing
and argument in the Court of Special Appeals.  See Code (1974, 1995
Repl. Vol.), § 12-201 of the Courts and Judicial Proceedings
Article.
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED IN PART AND
REVERSED 
IN 
PART, 
AND 
CASE
REMANDED TO THE COURT OF SPECIAL
APPEALS WITH DIRECTIONS TO VACATE
THE JUDGMENT OF THE CIRCUIT COURT
FOR MONTGOMERY COUNTY AND TO
REMAND THE CASE TO THAT COURT FOR
FURTHER PROCEEDINGS CONSISTENT
WITH THIS OPINION.  COSTS IN THIS
COURT AND IN THE COURT OF SPECIAL
APPEALS TO BE DIVIDED EQUALLY
BETWEEN THE TWO SIDES.