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HABC gets former insurer to pay part of lead-paint verdict

The Housing Authority of Baltimore City has paid $3.67 million toward a lead-paint verdict after recovering money from a liquidated insurance company.

Brian S. Brown and Saul E. Kerpelman represent Markeath Justice, who won a $5.7 million lead-paint verdict in 2008. The city has obtained funds from a liquidated insurer to pay $3.6 million.

The insurance recovery was deposited Monday by the lawyer for Markeath Justice, the plaintiff in a lead-paint lawsuit filed in Baltimore City Circuit Court in 2004.

Justice’s claim is one of several unpaid verdicts pending against the city, which is also facing more than $900 million in hundreds of potential claims for lead-paint poisoning.

In February 2008, a jury awarded $5.7 million to Justice, then 24, who was exposed to lead paint in an HABC home between 1983 and 1986.

Due to that exposure, Justice reads and spells at a first-grade level and has the math skills of a second-grader, according to the complaint and expert testimony at trial.

“This has been a long hard road to say the least and we are glad to find some level of resolution for what this plaintiff has suffered,” Baltimore Housing Commissioner Paul T. Graziano said in a statement. “HABC will continue to work hard to resolve lead paint judgments in a fair and responsible way while protecting public funds needed for the thousands of vulnerable low income housing families.”

Under the 2008 verdict, the HABC was to pay more than $5.1 million in past and future non-economic damages and more than $600,000 in economic damages to Justice. Due to the age of the case, the state’s cap on non-economic damages did not apply.

The $3.6 million partially satisfies the judgment, which has also been accruing annual interest since the jury’s verdict.

“It doesn’t even pay off the principal and it pays zero of the interest,” said Brian S. Brown of Saul E. Kerpelman & Associates, which represented Justice and his mother, Terryce Agu. “It’s great for my client that he is getting something, but there is still a good deal left that they owe in this case and in others.”

At the time of the verdict, Justice had a job as a shoemaker’s helper in St. Louis, but has since left that position and moved to another state, Brown said.

The HABC is facing eight unresolved court judgments in lead-paint damages cases. Justice’s payment brings the total to $4.6 million on four of the judgments. Two of the eight judgments are on appeal.

In liquidation

The $3.6 million came from a general liability policy the agency had with Integrity Insurance Co. from 1981-85. The insurance company was declared insolvent in 1987 and the housing agency pursued payment against Integrity. Richard White, deputy liquidator for Integrity Insurance Company in Liquidation, said the $3.6 million would likely close the city’s claim.

“That is likely all they are going be able to get,” White said. “They might be entitled to more, but only if more money turns up.”

Cheron Porter, director of communications for the HABC, said none of the other cases had insurance policies attached to them. Porter said the agency was working to find ways to satisfy the court judgments.

“With the tight position we’re in, we can’t use federal funds to pay judgments and the HABC doesn’t make money,” Porter said. “So, we’re trying to find ways to make the payments. We’re doing the best with what we have.”

Brown questioned why the agency has not done more to comply with the court-ordered judgments and direction to either self-insure or buy insurance.

“They continue to defy the Court of Appeals, which has told them the enabling legislation that created them tells them they must self-insure and pay these judgments,” Brown said. “There is a litany of methods available for how they could raise the funds from issuing bonds, sinking funds or finding the funding for insurance.”

In January, a different law firm attempted to levy on HABC property to satisfy another judgment. That move was thwarted when the underlying verdict was overturned.

While that case was pending, the HABC issued a statement that said its insurance policy was cancelled in 1996 and that “no commercially reasonable” amount of insurance or self-insurance could cover the potential legal exposure in the outstanding claims, which it estimated at $900 million.

The agency said also that a $200,000 cap on lead-paint claims against housing authorities has not been uniformly applied.