CX Reinsurance v. Johnson , 481 Md. 472 ( 2022 )


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  • CX Reinsurance Company Limited and Liberty Mutual Mid-Atlantic Insurance Company
    v. Devon S. Johnson, et al., No. 47, September Term, 2021. Opinion by Biran, J.
    INSURANCE – GENERAL LIABILITY INSURANCE POLICIES – INTENDED
    BENEFICIARIES – VESTING OF RIGHTS OF TORT CLAIMANTS – Petitioners
    are insurance companies (the “Insurers”) that issued commercial general liability policies
    (the “Policies”) to several Baltimore residential landlords (the “Landlords”) that included
    coverage for bodily injuries resulting from lead paint exposure at the Landlords’ rental
    properties. After allegedly discovering material misrepresentations in the Landlords’ initial
    policy applications, one of the Insurers filed contract rescission actions against the
    Landlords. Eventually, those rescission cases were settled. Under the terms of the
    settlements, the coverage for lead paint-related losses was substantially reduced or, in some
    instances, completely eliminated. Respondents are tort claimants (the “Claimants”) who
    allege that they suffered bodily injuries as a result of their exposure to lead paint while
    residing in the Landlords’ rental properties. The Court of Appeals held that the relevant
    provisions of the Policies make clear that those Claimants who do not hold final judgments
    against the Landlords (and who have not entered into settlement agreements with the
    Landlords, with the Insurers’ approval) are not intended beneficiaries of the Policies. No
    Maryland statute, regulation, or current public policy overrides the terms of the Policies
    such as to make all tort claimants intended beneficiaries of general liability insurance
    policies. The Claimants who did not have final judgments against their Landlords prior to
    the settlements of the rescission cases do not have the right to enforce the pre-settlement
    terms of the Policies, provided the settlements were made in good faith, rather than being
    collusive. Under the terms of the Policies, those Claimants who obtained final judgments
    before the settlements of the rescission cases became intended beneficiaries of the Policies
    as of the date they obtained their judgments in the trial court and, therefore, have the right
    to enforce the pre-settlement terms of the Policies.
    Circuit Court for Baltimore City                                                            IN THE COURT OF APPEALS
    Case No. 24-C-18-001930
    Argued: April 4, 2022
    OF MARYLAND
    No. 47
    September Term, 2021
    CX REINSURANCE COMPANY LIMITED
    AND LIBERTY MUTUAL MID-ATLANTIC
    INSURANCE COMPANY
    v.
    DEVON S. JOHNSON, ET AL.
    *Getty, C.J.
    Watts
    Hotten
    Booth
    Biran
    Harrell, Glenn T., Jr.
    (Senior Judge, Specially Assigned)
    McDonald, Robert N.
    (Senior Judge, Specially Assigned),
    JJ.
    Opinion by Biran, J.
    Filed: August 29, 2022
    Pursuant to Maryland Uniform Electronic Legal
    Materials Act
    *Getty, C.J., now a Senior Judge, participated in the
    (§§ 10-1601 et seq. of the State Government Article) this document is authentic.
    hearing and conference of this case while an active
    2022-08-29                                                    member of this Court. After being recalled pursuant
    15:21-04:00
    to Md. Const., Art. IV, § 3A, he also participated in
    the decision and adoption of this opinion.
    Suzanne C. Johnson, Clerk
    For many years, CX Reinsurance Company Limited and its predecessor entity
    (“CX”), in combination with Liberty Mutual Mid-Atlantic Insurance Company and its
    predecessor entity (“Liberty Mutual”), issued commercial general liability policies (the
    “Policies”) to several Baltimore residential landlords (the “Landlords”) that included
    coverage for bodily injuries resulting from lead paint exposure at the Landlords’ rental
    properties. After allegedly discovering material misrepresentations in the Landlords’ initial
    policy applications, CX filed contract rescission actions against the Landlords in 2015.
    Eventually, CX and the Landlords settled the rescission cases. Under the terms of the
    settlements, the coverage for lead paint-related losses was substantially reduced or, in some
    instances, completely eliminated.
    CX and Liberty Mutual (collectively, the “Insurers”) are the Petitioners in this case.
    The Respondents are 15 tort claimants (the “Claimants”) who allege that they suffered
    bodily injuries as a result of their exposure to lead paint while residing in the Landlords’
    rental properties. The majority of the Claimants had not obtained final judgments against,
    or entered into settlements with, the Landlords before CX and the Landlords settled the
    rescission cases.
    In the Circuit Court for Baltimore City, the Claimants filed suit against the Insurers
    and the Landlords, seeking a declaration that: (1) the Claimants are “intended third-party
    beneficiaries” of the Policies; and (2) the settlements between CX and the Landlords do
    not modify or affect the insurance proceeds available under the Policies to indemnify the
    Landlords with respect to judgments obtained by the Claimants against the Landlords. The
    circuit court ruled that the Claimants are intended beneficiaries of the Policies and granted
    summary judgment in the Claimants’ favor. The Court of Special Appeals affirmed.
    As discussed below, the relevant provisions of the Policies make clear that those
    Claimants who do not hold final judgments against the Landlords (and who have not
    entered into approved settlement agreements with the Landlords) are not the primary
    parties in interest under the Policies. No Maryland statute, regulation, or public policy
    recognizes tort claimants who do not hold judgments against insureds as intended
    beneficiaries of general liability insurance policies. That being the case, the language of
    the Policies controls here. To the extent the Claimants do not hold judgments against, and
    have not entered into approved settlement agreements with, the Landlords, they are not
    intended beneficiaries of the Policies. Therefore, assuming that they eventually do obtain
    judgments against, or enter into settlements with, their Landlords, those Claimants will not
    have the right to enforce the terms of Policies as they existed prior to the rescission case
    settlements, provided that those settlements were the product of good-faith, non-collusive
    negotiations. Those Claimants who obtained final judgments against their Landlords prior
    to the settlements of the applicable rescission cases may enforce the pre-settlement terms
    of the Policies.
    2
    I
    Background
    As stated above, the circuit court granted the Claimants’ motion for summary
    judgment. In the light most favorable to the Insurers,1 the record reflects the following:
    A. The Policies
    Beginning in 1997, the Landlords submitted applications to CX to obtain
    commercial general liability insurance policies. The applications included Question 16, in
    which CX asked whether “the Insured [has] ever had any lead paint violations in the
    building(s)?” Each of the Landlords answered “No” to this question on the application
    itself or, if they left that question blank, they allegedly otherwise provided CX with a
    negative response to that question. Based on these negative responses, CX issued the
    Policies, which included coverage relating to bodily injuries resulting from exposure to
    lead-based paint at the Landlords’ covered properties during the policy term. Specifically,
    the Policies provided that
    we[2] will pay those sums that the Insured becomes legally obligated to pay
    as damages because of “bodily injury” or “property damage” arising out of
    the Ingestion, Inhalation, absorption of, or exposure to lead, lead-paint or
    other lead-based products of any kind, form or nature whatsoever to which
    the insurance provided by this endorsement applies. We will have the right
    and duty to defend any “suit” seeking those damages. We may at our
    1
    See, e.g., Rossello v. Zurich Am. Ins. Co., 
    468 Md. 92
    , 103 (2020) (when analyzing
    a grant of summary judgment, an appellate court “review[s] the record in the light most
    favorable to the nonmoving party and construe[s] any reasonable inferences that may be
    drawn from the facts against the moving party”) (internal quotation marks and citation
    omitted).
    In the Policies, “we” or “us” referred to the Insurers, and “you” referred to the
    2
    “Named Insureds” (as relevant here, the Landlords).
    3
    discretion investigate any “occurrence” and settle any claim or “suit” that
    may result.
    Included in the Policies was a “Schedule of Named Insureds,” identifying the first
    Named Insured as well as other Named Insureds and identifying the insured properties in
    a “Schedule of Locations.” The Policies also contained a “Changes” provision stating:
    This policy contains all the agreements between you and us concerning the
    insurance afforded. The first Named Insured shown in the Declarations is
    authorized to make changes in the terms of this policy with our consent. This
    policy’s terms can be amended or waived only by endorsement issued by us
    and made a part of this policy.
    The Policies also included a “Cancellation” provision allowing CX or the first Named
    Insured to cancel the policy. Nothing in the Policies required CX or the first Named Insured
    to obtain the consent of any other Named Insured or any other person or entity before
    exercising the right of cancellation or agreeing to a change in terms.
    In addition, the policies included a “Legal Action Against Us” provision, stating
    that:
    No person or organization has a right under this Coverage Part:
    a. To join us as a party or otherwise bring us into a “suit” asking for damages
    from an insured; or
    b. To sue us on this Coverage Part, unless all of its terms have been fully
    complied with.
    A person or organization may sue us to recover on an agreed settlement or
    on a final judgment against an insured obtained after an actual trial; but we
    will not be liable for damages that are not payable under the terms of this
    Coverage Part or that are in excess of the applicable limit of insurance. An
    agreed settlement means a settlement and release of liability signed by us,
    the insured and the claimant or the claimant’s legal representative.
    4
    For lead paint claims, the Policies purported to cover up to $1,000,000 for any one
    “occurrence” and, depending on the policy, up to $1,000,000 or $2,000,000 in the
    aggregate. The Insurers continually renewed the Policies for more than a decade.3
    B. The Change in the Legal Landscape Regarding Liability for Lead-Paint Claims
    In 1994, the Maryland General Assembly enacted the Reduction of Lead Risk in
    Housing Act, which, among other things, effectively placed a $17,000 cap on lead-related
    personal injury compensation by providing immunity from suit to owners of “affected
    properties” who made “qualified offers” of up to $17,000 to persons “at risk” of ingesting
    lead at the properties. H.B. 760, 1994 Leg., 408th Sess. (Md. 1994). Based, at least in part,
    on this recently adopted legislation, the Insurers decided to offer their commercial general
    liability insurance products to the Landlords. While the Policies on paper provided for up
    to $1,000,000 in coverage per claim of bodily injury resulting from exposure to lead paint,
    the Landlords’ liability for each such claim effectively was capped at $17,000.
    The landscape relating to lead-paint claims changed with this Court’s 2011 decision
    in Jackson v. Dackman Co., 
    422 Md. 357
     (2011). In that case, we held that the immunity
    provisions in the Reduction of Lead Risk in Housing Act violated Article 19 of the
    Maryland Declaration of Rights. 
    Id. at 382-83
    . As a result, the Insurers’ potential exposure
    for lead-related personal injury claims under the Polices increased substantially.
    3
    Beginning in 1999, CX’s underwriting agent, Continental Coverage Corporation
    (“CCC”), issued the renewal policies to the Landlords on behalf of Liberty Mutual. Under
    a “Fronting Arrangement,” CCC made the underwriting decisions with respect to the
    Policies issued by Liberty Mutual, and CX was responsible for the administration and
    payment of covered claims.
    5
    C. The Rescission Actions
    In 2015, CX filed actions against the Landlords in the United States District Court
    for the District of Maryland, seeking recission of the Policies. Among other theories, CX
    claimed that the Landlords had made material misrepresentations in their initial
    applications for insurance by falsely answering Question 16 concerning prior “lead paint
    violations in the building(s)[.]” According to CX’s Complaints, prior to the Landlords
    submitting their applications, the Baltimore Department of Health had cited the Landlords
    and/or other Named Insureds for lead paint violations in numerous buildings included on
    the Policies’ Schedules of Locations. CX further alleged that, if the Landlords had
    truthfully answered Question 16, CX would not have issued the Policies.
    Over the next several years, CX and the Landlords litigated the various rescission
    cases. Eventually, the parties entered into settlements to resolve CX’s claims. Six of the
    settlements resulted in amendments to the Policies that reduced, but did not fully eliminate,
    coverage; three of the agreements resulted in mutual rescission of the underlying policies
    altogether.
    D. This Litigation
    In April 2018, one of the Claimants, Devon S. Johnson, filed a Complaint for
    Declaratory Judgment against his former Landlord and CX in the Circuit Court for
    Baltimore City. As the litigation progressed, more Claimants joined the action, and their
    former Landlords, as well as Liberty Mutual, were added as defendants.
    The operative complaint in the case is the Third Amended Complaint for
    Declaratory Judgment, which the Claimants filed in June 2019. The Claimants allege that
    6
    they are former residents of insured properties owned by the Landlords, and that they were
    damaged as a result of their exposure to lead paint existing at those properties. They further
    allege that they were not parties to the agreements between CX and the Landlords that
    settled CX’s rescission cases, and that they did not consent to the purported modifications
    and rescissions of the Policies. The Claimants sought a declaration that, among other
    things, they are “intended third party beneficiaries” of the Policies, and that the settlements
    between CX and the Landlords do not operate to reduce the applicable policy limits of the
    Policies with respect to themselves or to “any other claimant who has vested rights” in the
    Policies.
    Of the 15 Claimants, three (Devon Johnson, Chauncey Liles, and Shyliyah Streeter)
    obtained judgments against their Landlords for lead paint-related injuries prior to the
    settlement of the applicable rescission actions between CX and the Landlords.4
    The parties filed cross-motions for summary judgment. After conducting a hearing,
    the circuit court granted the Claimants’ motion for summary judgment and denied the
    Insurers’ motions for summary judgment. The court ruled that: (1) the Claimants “are third-
    party beneficiaries of the Policies”; (2) the Claimants “have vested rights in the Policies as
    they existed before being rescinded by agreement or modified pursuant to the Rescission
    Settlement Agreements between [CX] and the Landlord Defendants”; and (3) the
    “Rescission Settlement Agreements do not affect [the Claimants’] vested rights in the
    4
    A fourth Claimant, Lea Gardner, obtained a final judgment against her former
    Landlord on January 24, 2019. The record reflects that CX and Ms. Gardner’s former
    Landlord settled their rescission case on or about August 16, 2016.
    7
    Policies, and the Rescission Settlement Agreements are ineffective as to [the
    Claimants]….”
    The Insurers appealed, and the Court of Special Appeals affirmed the judgment of
    the circuit court. CX Reinsurance Co. Ltd. v. Johnson, 
    252 Md. App. 393
     (2021). The Court
    of Special Appeals concluded that “injured tort claimants are intended third-party
    beneficiaries of liability insurance policies.” Id. at 414. The court rejected the notion “that
    to be an intended third-party beneficiary of an insurance policy, the injured party must first
    obtain a judgment or execute a settlement agreement with a covered insured.” Id. at 415.
    The intermediate appellate court further held that the Claimants “obtained vested rights in
    [the] Policies when they suffered their injuries.” Id. at 426. That being the case, “the
    Insurers and [L]andlords could not subsequently modify [the Policies] pursuant to the
    Rescission Settlement Agreements.” Id.
    The Insurers filed a petition for writ of certiorari with this Court, which we granted.
    CX Reinsurance Co. Ltd. v. Johnson, 
    476 Md. 583
     (2021). We combine the three questions
    the Insurers asked us to review into one: Did the trial court properly grant summary
    judgment to the Claimants on the ground that they are intended beneficiaries of the
    Policies?5
    5
    The Insurers sought review of these questions:
    (1) Whether the [Court of Special Appeals] erred in refusing to interpret
    insurance policies like other contracts, concluding that “sound public
    policy dictates that liability insurance policies should be construed to
    protect injured tort claimants” notwithstanding their terms?
    8
    II
    Standard of Review
    Because “[t]he question of whether a trial court’s grant of summary judgment was
    proper is a question of law,” this Court reviews it de novo, without deference to the
    decisions of the lower courts. Rossello v. Zurich Am. Ins. Co., 
    468 Md. 92
    , 102 (2020)
    (internal quotation marks and citations omitted). “In reviewing a grant of summary
    judgment …, we independently review the record to determine whether the parties properly
    generated a dispute of material fact and, if not, whether the moving party is entitled to
    judgment as a matter of law.” 
    Id. at 102-03
     (internal quotation marks and citations omitted).
    “We review the record in the light most favorable to the nonmoving party and construe any
    reasonable inferences that may be drawn from the facts against the moving party.” 
    Id. at 103
     (internal quotation marks and citation omitted).
    (2) Whether the [Court of Special Appeals] erred in holding that all
    claimants, who have asserted or will assert claims, are intended
    beneficiaries of insurance policies, with vested interests in those
    policies from the date of their alleged injuries, and have the same
    rights under those policies as claimants, who have obtained judgments
    or entered into settlements?
    (3) Whether the [Court of Special Appeals] erred in holding that an
    insured and its insurer cannot resolve litigation by entering a
    settlement, in good faith, that modifies or reduces insurance coverage
    without the consent of all current and future tort claimants?
    9
    III
    Discussion
    The Claimants maintain that the Insurers and the Landlords did not have the power
    to reduce or eliminate coverage under the Policies to the detriment of the Claimants. The
    parties agree that the validity of that contention depends, in the first instance, on whether
    the Claimants are “intended beneficiaries” of the Policies or, instead, whether they are
    “incidental beneficiaries.” If the Claimants are not intended beneficiaries, but merely
    incidental beneficiaries, then they have no vested rights in the Policies.
    According to the Insurers, the Policies do not manifest any intention to make the
    Claimants the primary parties in interest until they either hold a final judgment against their
    Landlords or have entered into an approved settlement with their Landlords. The Insurers
    contend that the Policies are designed to protect the financial interests of the Landlords in
    exchange for the payment of premiums to the Insurers. Further, the Insurers contend that
    no Maryland statute, regulation, or public policy dictates that tort claimants are intended
    beneficiaries of general liability insurance policies prior to the entry of a final judgment
    against an insured. Therefore, the language of the Policies is dispositive and requires this
    Court to conclude that the Claimants are not intended beneficiaries of the Policies to the
    extent they have not obtained final judgments against, or entered into approved settlements
    with, their Landlords. Rather, they are incidental beneficiaries of the Policies, and are
    subject to changes in the Policies that result from good-faith litigation settlements between
    the Insurers and the Landlords.
    10
    The Claimants argue that prior Maryland cases, as well as persuasive out-of-state
    authority, compel the conclusion that tort claimants are intended beneficiaries of general
    liability insurance policies, and that they have vested rights in such policies from the
    moment they are injured. As such, they argue, CX and the Landlords could not rescind or
    modify the coverages that were contained in the Policies to the detriment of the Claimants
    and others similarly situated.
    For the reasons stated below, we agree with the Insurers.
    A. Governing Principles
    1. Construction of Insurance Policies
    “Maryland does not follow the rule, adopted in many jurisdictions, that an insurance
    policy is to be construed most strongly against the insurer. Rather, following the rule
    applicable to the construction of contracts generally, … the intention of the parties is to be
    ascertained if reasonably possible from the policy as a whole.” Kendall v. Nationwide Ins.
    Co., 
    348 Md. 157
    , 166 (1997) (internal quotation marks and citation omitted); see also
    Mesmer v. Maryland Auto. Ins. Fund, 
    353 Md. 241
    , 252 (1999) (“In Maryland, insurance
    policies are treated like other contracts.”). Thus, “[e]xcept as modified by statutes or
    regulations, the legal principles applicable to contracts generally are also applicable to
    insurance policies.” Mesmer, 
    353 Md. at 252
    . This means that “any clause in an insurance
    policy that is contrary to the public policy of this State, as set forth in any statute, is invalid
    and unenforceable.” Harleysville Mut. Ins. Co. v. Zelinski, 
    393 Md. 83
    , 88-89 (internal
    quotation marks and citation omitted).
    11
    In most circumstances, the duty of an insurer to defend against actions and
    indemnify an insured in the event of an adverse judgment arises from, and is governed by,
    the terms of the applicable insurance policy. See Mesmer, 
    353 Md. at 257-58
     (“We have
    repeatedly indicated that the obligation to defend and the obligation to indemnify are
    entirely contractual.”); see also Brohawn v. Transamerica Ins. Co., 
    276 Md. 396
    , 409
    (1975) (“The promise to defend the insured, as well as the promise to indemnify, is the
    consideration received by the insured for payment of the policy premiums.”).
    2. Intended Beneficiaries Versus Incidental Beneficiaries
    At common law, only a party to a contract could initiate an action to enforce its
    terms. 120 W. Fayette St., LLLP v. Mayor and City Council of Baltimore, 
    426 Md. 14
    , 35
    (2012). However, the law has evolved since, such that certain beneficiaries to a contract
    may also bring an action to enforce its terms. 
    Id. at 35-36
    . Not all third parties that may
    benefit from a contract have the power to initiate an action to enforce its terms. See 
    id. at 36
     (“It is not enough that the contract merely operates to an individual’s benefit[.]”).
    Rather, a third party has the right to enforce a contract “if the contract was intended for his
    [or her] benefit and it ... clearly appear[s] that the parties intended to recognize him [or her]
    as the primary party in interest and as privy to the promise.” 
    Id.
     (internal quotation marks
    and citation omitted). Such a third party is referred to as an “intended beneficiary.” 
    Id. at 35-36
    .
    The “crucial fact” in determining whether a third party is an intended beneficiary of
    a contract is “whether the pertinent provisions in the contract were ‘inserted … to benefit’
    the third party.” CR-RSC Tower I, LLC v. RSC Tower I, LLC, 
    429 Md. 387
    , 457 (2012)
    12
    (quoting Lovell Land, Inc. v. State Highway Admin., 
    408 Md. 242
    , 261, 265 (2009)).
    Another “factor to consider … is whether the third party is named in the contract or its
    antecedent agreements.” 
    Id.
     (internal quotation marks and citation omitted); see also
    Restatement (Second) of Contracts § 302(1) (Am. Law Inst. 1981) (“Restatement”) (stating
    that, “[u]nless otherwise agreed between promisor and promisee, a beneficiary of a promise
    is an intended beneficiary if recognition of a right to performance in the beneficiary is
    appropriate to effectuate the intention of the parties” and either “the performance of the
    promise will satisfy an obligation of the promisee to pay money to the beneficiary” or “the
    circumstances indicate that the promisee intends to give the beneficiary the benefit of the
    promised performance”); Lovell Land, 408 Md. at 262 & n.6 (citing with approval the
    distinction between intended and incidental beneficiaries set forth in Restatement § 302).
    “In applying this standard, we look to the intention of the parties to recognize a person or
    class as a primary party in interest as expressed in the language of the instrument and
    consideration of the surrounding circumstances as reflecting upon the parties’ intention[.]”
    CR-RSC Tower I, 429 Md. at 458 (internal quotation marks and citation omitted).6
    A beneficiary of a contract who is not an “intended beneficiary” is an “incidental
    beneficiary,” who “acquires by virtue of the promise no right against the promisor or the
    promisee.” 120 W. Fayette St., 
    426 Md. at 36
     (quoting Lovell Land, 408 Md. at 261 (citation
    6
    We noted in CR-RSC Tower I that consideration of “surrounding circumstances”
    was apparently “a deviation from the general rule for interpreting contracts, under which
    we do not consider ‘extrinsic evidence’ of the parties’ intent unless the language of the
    contract is ambiguous.” Id. at 458 n.61.
    13
    omitted)); see also Restatement § 302(2) (“An incidental beneficiary is a beneficiary who
    is not an intended beneficiary.”).
    In 120 W. Fayette Street, this Court highlighted the distinction between intended
    and incidental third-party beneficiaries. In that case, Baltimore City entered into a
    Memorandum of Agreement (“MOA”) with the Maryland Historical Trust (the “Trust”)
    detailing how certain historic properties were to be treated under a plan to renew a
    five-block area in the City. 
    426 Md. at 16-17
    . After the Trust’s director granted approval
    of the City’s plans, 120 West Fayette Street, LLLP (“120 West Fayette”) filed an action
    seeking a declaration of rights under the MOA in order to challenge the approval. See 
    id. at 17
    . The circuit court found that 120 West Fayette was neither a party to, nor a beneficiary
    of, the MOA between the City and the Trust, and, based primarily on this finding, dismissed
    the complaint for failure to state a claim upon which relief could be granted. 
    Id. at 23-24
    .
    When the case came before this Court, we considered whether 120 West Fayette
    was an intended beneficiary, or rather an incidental beneficiary, of the MOA. 
    Id. at 36
    . We
    observed that “[t]he promises and benefits set forth in the MOA are directed solely to the
    City and the Trust” and “[n]owhere in the MOA is it contemplated that 120 West Fayette
    is to receive a benefit.” 
    Id.
     Therefore, we concluded that “the parties to the MOA did not
    intend to recognize 120 West Fayette as the primary party in interest and as privy to the
    promise.” 
    Id. at 37
     (cleaned up). It followed “that 120 West Fayette, at best an incidental
    beneficiary to the MOA, may not file a suit requesting declaratory judgment that interprets
    and enforces an agreement to which it has no part.” 
    Id.
     Thus, this Court recognized the
    14
    parties’ intent, as evidenced by the terms of the contract itself, as the primary determinant
    of whether a third party is an intended or an incidental beneficiary to a given contract.
    We also addressed the distinction between intended and incidental beneficiaries in
    CR-RSC Tower I, 429 Md. at 457. In that case, we analyzed two separate ground leases
    entered into between two landlords of adjoining properties and two developers who sought
    to create two “intertwined, mutually-dependent towers.” See id. at 456 (cleaned up).
    “Neither ground lease would have been executed had the other not been executed
    simultaneously.” Id. (cleaned up). After project delays resulted in financing for the project
    falling through, the developers sued the landlords. Id. at 401-03, 451 n.54. The jury found
    in favor of the developers and entered an award of damages against the landlords jointly
    and severally. Id. at 403. Each landlord was responsible for each developer’s damages
    because “[t]he jury found that each [developer] was entitled to enforce the [other’s] ground
    lease, either as a third-party beneficiary ... or a third-party entitled to the benefit of a
    covenant running with the land[.]” Id. at 454 (internal quotation marks omitted). The Court
    of Special Appeals reversed the damages award, concluding that there was insufficient
    evidence to support either theory of joint and several liability. Id.
    This Court affirmed. As to the intended beneficiary theory, we contrasted the
    developers with the beneficiaries in Shillman v. Hobstetter, 
    249 Md. 678
     (1968), and
    Prescott v. Coppage, 
    266 Md. 562
     (1972). CR-RSC Tower I, 429 Md. at 456-60. Shillman
    involved an agreement between a residential developer and a lender under which the lender
    agreed to issue conditional commitments for certain planned homes if the developer would
    refund certain purchasers’ deposits. 
    249 Md. at 682-83
    . The Shillman Court held that the
    15
    purchasers to whom the deposits were to be returned were intended beneficiaries of the
    contracts. 
    Id. at 690
    . As we explained in CR-RSC Tower I, “[t]he only thing the developer
    [in Shillman] promised to do under the agreement (return the deposits) was clearly intended
    to benefit the purchasers, so logically we found that the purchasers were intended third-
    party beneficiaries.” 429 Md. at 459 (citing Shillman, 
    249 Md. at 690
    ).
    Prescott v. Coppage concerned the receivership of Maryland Thrift Savings and
    Loan Company (“Maryland Thrift”). Prescott was appointed special counsel to Maryland
    Thrift’s receiver. 
    266 Md. at 574
    . Coppage sued the receiver, as well as Prescott and others,
    after the receiver paid creditors with lower priority than Coppage, leaving insufficient
    assets to fully pay the debt that Maryland Thrift owed to Coppage. 
    Id. at 565-66
    . The order
    appointing the receiver required the receiver “to take possession of [Maryland Thrift’s]
    assets and property and hold or dispose of them under the direction, supervision and further
    order of this Court.” 
    Id. at 574
     (internal quotation marks omitted). The order also required
    the receiver “to mail a copy of the order of appointment to each creditor of Maryland
    Thrift[.]” 
    Id.
     (cleaned up). In reversing the trial court’s judgment in favor of Prescott, this
    Court explained that “the order of appointment of [Maryland Thrift’s receiver] itself makes
    clear that all creditors of Maryland Thrift were third party beneficiaries. The order of
    appointment of Prescott by necessary implication bound him to those creditor
    beneficiaries.” 
    Id.
     Thus, this Court held that Prescott was jointly liable with the receiver to
    Coppage. 
    Id. at 576
    .
    In CR-RSC Tower I, we observed that the documents at issue in Shillman and
    Prescott “were created specifically to benefit the third parties in question.” CR-RSC Tower
    16
    I, 429 Md. at 459. “The same cannot be said of the ground leases” at issue in CR-RSC
    Tower I, “which were clearly entered into first and foremost for the benefit of the parties
    that signed them.” Id. Important in our analysis was that:
    In each ground lease, the purported third-party beneficiary is mentioned only
    briefly and in passing – to wit, in sections involving easements running
    between the two parcels, plans for the development of common areas, and
    overall site plans that mention both towers. The peripheral nature of these
    provisions – which simply describe the joint nature of the two projects – is
    substantially different from the central provisions in Shillman and Prescott,
    which demonstrated how the third parties in those cases were “owed ... a duty
    under the contract[s].” This, we said, was the “crucial fact” in support of
    finding a third-party beneficiary, and it is not present here.
    Id. at 459-60 (footnotes omitted).
    B. The Claimants Are Not Intended Beneficiaries of the Policies Until They
    Obtain a Final Judgment Against, or Enter into a Settlement Agreement with,
    Their Landlords.
    As discussed above, three of the Claimants obtained final judgments against their
    Landlords prior to the settlements between their Landlords and CX in the rescission
    actions. Thus, under the terms of the Policies, those Claimants became intended
    beneficiaries of the Policies as of the date they obtained their judgments against the
    Landlords in the trial court. After they secured the judgments, those three Claimants had
    the right to enforce the pre-settlement terms of the Policies,7 both under the terms of the
    7
    Thus, the Court of Special Appeals’ holding that the Claimants are intended
    beneficiaries of the Policies is correct as to these three Claimants (Devon Johnson,
    Chauncey Liles, and Shyliyah Streeter). However, these Claimants’ rights under the
    Policies vested at the time they obtained their judgments against the Landlords, not at the
    time of injury. We therefore affirm the judgment of the Court of Special Appeals as to these
    three Claimants on different grounds than the Court of Special Appeals articulated.
    17
    Policies themselves and under Maryland’s “direct action” statute, Md. Code Ann., Ins.
    (“IN”) § 19-102(b) (1995, 2017 Repl. Vol).8 The Insurers acknowledge these points.9
    Thus, we focus the remainder of our analysis on those Claimants who had not
    obtained final judgments against their Landlords before CX and the Landlords purported
    to reduce or eliminate the coverage available under the Policies through the settlements in
    the rescission cases. We conclude that those 12 Claimants were not intended beneficiaries
    of the Policies at the time of the rescission settlements. First, the plain language of the
    Policies evinces no intent to make tort claimants, without final judgments against the
    8
    The Maryland “direct action” statute provides:
    Each liability insurance policy issued in the State shall provide that:
    (1) the bankruptcy or insolvency of the insured does not release the
    insurer from liability; and
    (2) if an injured person or another person claiming by, through, or
    under the injured person is unable, after execution on a final judgment
    entered in an action against an insured, to recover the full amount of
    the final judgment, the person may bring an action against the
    insured’s insurer in accordance with the terms of the policy for the
    lesser of the amount of the judgment recovered in the action against
    the insured or the amount of the policy.
    IN § 19-102(b).
    9
    At oral argument, a Judge asked counsel for the Insurers: “So those Claimants who
    had judgments, you agree that the rescission settlements don’t apply to them?” Counsel
    replied: “They do not and they did not.” In response to follow-up questions, the Insurers’
    counsel indicated that, in the instance “where there is a verdict which has not yet been
    reduced to a judgment,” the tort claimant nevertheless would be deemed to have secured a
    “final judgment” within the meaning of the “Legal Action Against Us” provision. In other
    words, as counsel for the Insurers acknowledged, under the “Legal Action Against Us”
    provision, a claimant becomes an intended beneficiary once he or she prevails against an
    insured in the trial court.
    18
    Landlords (or who have not entered into approved settlements with the Landlords), primary
    parties in interest. Second, no Maryland statute, regulation, or public policy overrides the
    intent of the parties who entered into the insurance contracts at issue here.
    1. The Language of the Policies Demonstrates That Only Tort Claimants Who
    Have Obtained a Final Judgment Against, or Who Have Entered into an
    Approved Settlement with, a Landlord Are Intended Beneficiaries.
    Under the plain language of the Policies, tort claimants do not become intended
    beneficiaries with the right to enforce the Policies’ terms until they hold final judgments
    against the Landlords or have entered into approved settlements with the Landlords.
    Several of the Policies’ terms lead to this conclusion.
    First, the Policies provide that the Insurers “will pay those sums that the Insured
    [Landlord] becomes legally obligated to pay as damages because of ‘bodily injury’ …
    arising out of the Ingestion, Inhalation, absorption of, or exposure to lead, lead-paint or
    other lead-based products of any kind[.]” (Emphasis added.) In the next sentence, the
    Policies say that the Insurers “will have the right and duty to defend any ‘suit’ seeking
    those damages.” (Emphasis added.) Based on the language of these provisions, it is clear
    that the parties to these insurance contracts understood and agreed that the Landlords would
    not “become legally obligated to pay” any damages until the conclusion of a “suit seeking
    those damages.”
    Second, the “Legal Action Against Us” provision states that “[n]o person or
    organization has a right … [t]o join us as a party or to otherwise bring us into a ‘suit’ asking
    for damages from an insured; or … [t]o sue us on this Coverage Part, unless all of its terms
    have been fully complied with.” However, this provision goes on to state that “[a] person
    19
    or organization may sue us to recover on an agreed settlement or on a final judgment against
    an insured obtained after an actual trial.”10 Thus, this provision evinces the parties’ intent
    to create enforceable rights in the Policies for tort claimants only if and when claimants
    obtain a judgment against a Landlord after a trial or enter into an approved settlement with
    a Landlord.
    Also relevant to our understanding of the parties’ intent with respect to tort
    claimants are the “Changes” and “Cancellation” provisions. The “Changes” provision
    states that “[t]he first Named Insured shown in the Declarations is authorized to make
    changes in the terms of this policy with our consent.” The “Cancellation” provision allows
    CX or the first Named Insured to cancel the policy. Nothing in these provisions requires
    CX or the first Named Insured to obtain the consent of any other person or entity before
    exercising the right of cancellation or agreeing to a change in terms. Read together with
    the “Legal Action Against Us” provision, it is clear that the parties to the Policies intended
    to allow the Insurers and the first Named Insureds to modify or eliminate coverage, but that
    any such changes would not affect the vested rights in the Policies of tort claimants who
    10
    The Claimants contend that this provision “merely restates Maryland’s direct
    action statute, which requires that each liability policy issued in the state include language
    authorizing injured persons who obtained judgments to bring damages claims directly
    against insurers.” The Claimants overlook that the “Legal Action Against Us” section goes
    beyond the direct action statute by allowing individuals who are parties to approved
    settlements to enforce those settlements directly against the Insurers in court. In any event,
    the important point is that, with the exception of approved settlements, the Policies go no
    further than the direct action statute in conferring rights on third parties to enforce the terms
    of the Policies.
    20
    had secured judgments against, or entered into approved settlements with, their Landlords
    prior to the time of the cancellation or modification of coverage.
    These provisions of the Policies collectively reflect that the parties did not intend to
    confer a benefit on a tort claimant who has not obtained a final judgment against, or who
    has not entered into an approved settlement with, an insured. The “primary parties in
    interest” in the Policies are the Landlords, who receive protection for losses, and the
    Insurers, who provide that protection in exchange for the payment of premiums. Like the
    ground leases in CR-RSC Tower I, the Policies at issue here “were clearly entered into first
    and foremost for the benefit of the parties that signed them.” CR-RSC Tower I, 429 Md. at
    459. Thus, tort claimants without final judgments or settlements are not additional parties
    in interest under the plain language of the Policies. In other words, they are incidental
    beneficiaries to the Policies.
    The Claimants attempt to avoid this straightforward reading of the Policies’
    language by contending that, under Megonnell v. USAA, 
    368 Md. 633
     (2001), a tortfeasor
    has a “legal obligation” to pay damages from the moment a claimant is injured as a result
    of tortious conduct, rather than when the claimant enters into a settlement or prevails at
    trial. Thus, according to the Claimants, when the Policies refer to the Landlords
    “becom[ing] legally obligated to pay … damages,” the Policies must be interpreted to mean
    the moment a potential tort claimant is harmed as a result of an insured’s acts or omissions.
    In Megonnell, this Court observed that “[p]arties often become legally obligated
    (‘liable’) to pay by way of contract, i.e., construction contracts, leases, insurance contracts,
    etc., or by committing tortious acts. The verdict of a jury and the judgment of a court are
    21
    merely a determination that a legal obligation existed, and continues to exist. The verdict
    of a jury and the judgment of the court do not, of themselves, create the underlying legal
    obligation.” 368 Md. at 645.
    Megonnell did not involve the question of whether a tort claimant without a
    judgment was an intended beneficiary of an insurance policy. Unlike most of the Claimants
    here, the plaintiff in Megonnell obtained a $291,000 judgment against her husband (the
    driver in a car accident), after which she made a claim for payment under the excess
    coverage provision of her husband’s umbrella policy. Under that provision, the insurer
    promised to “pay for injury or damage for which an insured becomes legally liable.” Id. at
    639. Before the wife’s case came to trial, the insurer settled with two accident victims for
    a total of $700,000. Id. at 638. The insurer denied the wife’s claim, among other reasons,
    based on its contention that the two prior settlements did not count toward the $500,000
    per accident limit in the husband’s primary auto policy. Id. at 645. The insurer contended
    that “an insured cannot be legally liable until a jury or court finds that person liable,” which
    therefore meant that the wife could not reach the excess coverage in the umbrella policy.
    Id.
    This Court rejected the insurer’s argument, holding that there was “no reason why
    the $700,000 cumulative settlement with the [other claimants] should not be applied toward
    the $500,000 per occurrence liability limits of the primary policy.” Id. at 646. In this regard,
    the Court focused on the meaning of “damages,” and held that “[d]amages are not limited
    to court-ordered payments; they can be claims made prior to trial that are resolved by
    settlements requiring the payment of sums of money. If respondent chooses to settle a claim
    22
    for damages and actually pays the damages without a trial, the damages are still going
    towards satisfying the limit of liability for all damages.” Id. at 648 (internal quotation
    marks omitted).11 Thus, Megonnell’s holding is consistent with the Policies’ recognition of
    approved settlements as providing vested rights to tort claimants.
    The Claimants conflate tort “liability” in general with an insured “becom[ing]
    legally obligated to pay … damages.” It is clear that the parties to the Policies intended that
    only approved settlements with, and final judgments against, the Landlords would trigger
    the Insurers’ legal obligation to pay damages. We do not read Megonnell as engrafting a
    different meaning onto this provision of the Policies.
    We also disagree with the Claimants’ contention that “[t]he surrounding
    circumstances of liability insurance policies establish that those policies are not private
    contracts between the insurer and policyholder to benefit only the policyholder.” In this
    regard, the Claimants cite Phillips v. Allstate Indemnity Co., 
    156 Md. App. 729
    , 746 (2004),
    for the proposition that a “liability insurance policy is ‘generally issued for the benefit of
    third parties who are injured and have a claim against a tortfeasor.’” (quoting 7 COUCH ON
    11
    Similarly, in Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Porter Hayden Co.,
    
    408 B.R. 66
     (D. Md. 2009), the federal district court rejected the notion that Porter Hayden
    (the insured) could not become “legally obligated to pay” damages to asbestos plaintiffs
    following the discharge of its bankruptcy. 
    Id. at 71-73
    . Citing Megonnell, the court
    reasoned that “Porter Hayden has an underlying, though contingent, legal obligation to the
    asbestos claimants because it committed [tortious] acts. That Porter Hayden had a legal
    obligation to the claimants before entering bankruptcy, or in the absence of bankruptcy,
    satisfies the requirement of a ‘legal obligation’ within the meaning of the policies.” 
    Id. at 72
    . The court invoked Maryland’s direct action statute, noting that “bankruptcy or
    insolvency of the insured does not release the insurer from liability.” 
    Id. at 73
     (quoting IN
    § 19-102(b)(1)). Porter Hayden, like Megonnell, did not involve the question of whether a
    third party was an intended beneficiary under the policies at issue.
    23
    INSURANCE § 104:8 (3d ed. 2003)). However, Phillips and many of the other cases upon
    which the Claimants rely involve compulsory motor vehicle liability insurance and,
    therefore, are distinguishable from this case.
    Motor vehicle liability insurance policies are subject to a different set of
    considerations than other types of insurance policies. In Van Horn v. Atlantic Mut. Ins. Co.,
    
    334 Md. 669
     (1994), this Court considered whether Maryland’s statute compelling
    automobile insurance, and specifically imposing certain policy termination requirements,
    abrogated an insurance company’s general contractual right to rescind the contract. In
    concluding that it did, this Court stated:
    In situations where a motor vehicle insurance policy is compelled by law,
    where the statutes do not expressly preserve the right of rescission ab initio,
    and where claims of innocent parties are involved, the cases throughout the
    country, with apparent unanimity, take the position that rescission ab initio
    is inconsistent with the statutory scheme. Among the jurisdictions with
    statutory enactments similar to Maryland’s, some cases rely on the statutory
    requirement that insurance be maintained, some cases rely on provisions
    similar to [Maryland statutory provisions] restricting the right to cancel, and
    some cases rely on both types of statutes. Nevertheless, all of the cases reach
    the same result, namely that rescission is impermissible to defeat claims like
    those involved in this case.
    
    Id. at 687
    . We further observed that “[a]ttempts by insurance companies, purporting to
    exercise contract rights, to avoid the public policy of compulsory motor vehicle insurance
    with mandated coverages, have repeatedly been rejected by this Court.” 
    Id. at 686
     (citations
    omitted). By making motor vehicle liability insurance mandatory in Maryland, the General
    Assembly established a public policy that every motor vehicle insurance contract is
    intended to benefit the general public, not just the parties to the insurance contract.
    24
    Unlike primary motor vehicle liability coverage, lead-related insurance coverage,
    and coverage under commercial general liability policies more broadly, is not mandatory
    under Maryland law. Indeed, the General Assembly has made it clear that an “authorized
    insurer may include in the policy a lead hazard coverage exclusion.” IN § 19-704(c)
    (emphasis added). Unlike automobile insurance policies, lead-related insurance policies
    have not been “modified by statutes or regulations” to be compulsory or otherwise adjusted
    in a way that would change the applicability of the relevant contractual provisions. For this
    reason, the Claimants’ reliance on motor vehicle liability insurance cases is misplaced.
    Other cases upon which the Claimants rely are also inapposite for additional
    reasons. Some of those cases, like Megonnell, involve plaintiffs who already had secured
    final judgments. For example, in Travelers Ins. Co. v. Godsey, 
    260 Md. 669
     (1971), the
    jury had already returned a verdict for the plaintiff and the insurer had agreed to a consent
    judgment when the insurer learned that the verdict was the result of collusion between the
    insured and the plaintiff. 
    Id. at 671-72
    . In explaining why the insurer was permitted to stop
    payment on checks it had issued in satisfaction of the consent judgment, this Court stated:
    [T]he right of the injured claimant to collect from the insurer of the one who
    harmed him derives from the contract right of the tortfeasor to have the
    insurer pay for him within the policy limit what otherwise he would be liable
    to pay. As the third party beneficiary of the insurance contract, the claimant
    stands in the shoes of the insured wrongdoer and vis-a-vis the insurer his
    rights are no greater than those of the insured’s. See Shillman v. Hobstetter,
    
    249 Md. 678
    , 690, 
    241 A.2d 570
    . It makes no difference that here the third
    party beneficiary is suing on drafts issued by the insurer to pay the debt of its
    insured to the claimant, rather than as is usually or often the case, seeking to
    recover on an attachment laid in the hands of the insurer after judgment has
    been recovered against the insured. Whatever procedural mode the claimant
    follows, the effort is to compel the insurer to pay the insured’s obligation to
    25
    the claimant, and therefore in such a situation that which we call a rose by
    any other name would smell as sweet.
    Id. at 674. The reference to the plaintiff in Godsey as a “third party beneficiary” is of no
    assistance to the Claimants. As the holder of a favorable jury verdict and a consent
    judgment, the plaintiff in Godsey would be considered an intended beneficiary under the
    Policies here as well.
    In Jones v. Hyatt Ins. Agency, Inc., 
    356 Md. 639
    , 646-47 (1999), this Court assumed
    for purposes of the opinion that the plaintiffs “had a viable cause of action in contract as
    third-party beneficiaries” of an agreement between an insurance broker and its customer
    under which the broker was supposed to procure motor vehicle liability insurance for the
    customer. Explaining the basis for this assumption, the Court stated: “We have recognized
    a similar third-party beneficiary cause of action in contract when a tort claimant sues the
    tortfeasor’s liability insurer for a declaratory judgment concerning coverage or for breach
    of the contractual duty to indemnify.” 
    Id.
     As support for this proposition, the Court cited
    two automobile cases – Mesmer, which we have cited above, and Washington Metro. Area
    Transit Auth. v. Queen, 
    324 Md. 326
    , 332 (1991) – as well as Harford Mut. Ins. Co. v.
    Woodfin Equities Corp., 
    344 Md. 399
    , 412-413 (1997).
    Although Woodfin Equities is not an automobile insurance case, it does not support
    the Claimants’ position. Far from endorsing a blanket rule under which every tort claimant
    is deemed to be an intended beneficiary of a liability insurance policy that provides
    coverage for the alleged tortfeasor, Woodfin Equities demonstrates that there is no such
    26
    rule. There, this Court distinguished between direct actions to enforce policy terms and
    declaratory judgment actions to resolve coverage disputes:
    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…. [T]he Maryland restriction upon direct actions
    against a defendant tortfeasor’s liability insurer applies only “until there has
    been a determination 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.”
    Woodfin Equities, 
    344 Md. at 413
     (quoting Washington Metro. Area Transit Auth., 
    324 Md. at 332
    ).
    Woodfin Equities also demonstrates that the Claimants confuse their right to obtain
    a ruling in this litigation under the Declaratory Judgment Act with the right to enforce the
    Policies’ terms. As Woodfin Equities makes clear, a tort claimant’s ability to bring a
    declaratory judgment action raising an issue related to coverage under a liability insurance
    policy and the claimant’s ability to sue the insurer to enforce the terms of the policy are not
    equivalent.
    Under the Declaratory Judgment Act:
    Any person interested under a deed, will, trust, land patent, written contract,
    or other writing constituting a contract, or whose rights, status, or other legal
    relations are affected by a statute, municipal ordinance, administrative rule
    or regulation, contract, or franchise, may have determined any question of
    construction or validity arising under the instrument, statute, ordinance,
    administrative rule or regulation, land patent, contract, or franchise and
    obtain a declaration of rights, status, or other legal relations under it.
    
    Md. Code Ann., Cts. & Jud. Proc. § 3-406
     (2020) (emphasis added).
    27
    The Claimants note that the Declaratory Judgment Act does not define what it means
    to be “interested under a . . . written contract.” According to the Claimants, “120 West
    Fayette fills in the gap, holding that for a third party to have a sufficient interest to bring a
    declaratory judgment action to interpret a contract, that party cannot be a mere incidental
    beneficiary of the contract.” Thus, the Claimants argue, because all acknowledge that they
    have the right to bring this declaratory judgment action, they must be intended
    beneficiaries, as opposed to incidental beneficiaries, of the Policies. We disagree.
    In 120 West Fayette, the Court stated “that 120 West Fayette, at best an incidental
    beneficiary to the [contract], may not file a suit requesting declaratory judgment that
    interprets and enforces an agreement to which it has no part.” 
    426 Md. at 37
     (emphasis
    added). Had 120 West Fayette sought a declaration only “interpreting” and not also
    “enforcing” the contract, perhaps it would have been deemed sufficiently “interested in”
    the contract to have standing under the Declaratory Judgment Act. 120 West Fayette’s
    request for a declaration enforcing the contract, however, implicated not just standing
    under the Declaratory Judgment Act, but also Maryland contract law principles. It was
    those principles that this Court relied on in holding that 120 West Fayette, as an incidental
    beneficiary of the contract, had no right to enforce the contract.
    2. No Maryland Statute, Regulation, or Public Policy Requires That All Tort
    Claimants Be Treated as Intended Beneficiaries of General Liability Insurance
    Policies.
    The Claimants have not cited any Maryland statute or regulation that overrides the
    intent of the parties to these insurance contracts to bestow enforcement rights only on those
    Claimants who hold final judgments against, or who have entered into approved
    28
    settlements with, the Landlords. The only statute or regulation that governs the rights of
    third parties in this context is the direct action statute, IN § 19-102(b), which restricts the
    direct right of action against insurers to those claimants who are “unable, after execution
    on a final judgment entered in an action against an insured, to recover the full amount of
    the final judgment[.]”
    Although the direct action statute does not itself provide all tort claimants with a
    right of action to enforce liability insurance policy terms, the Claimants contend that it
    nevertheless reflects the existence of a Maryland public policy to “recognize[] injured tort
    claimants’ coverage rights, regardless whether they hold tort judgments.” According to the
    Claimants, “[t]o adopt any other rule would permit insurers to defeat the purpose of the
    direct action statute by doing exactly what Insurers attempt to do here: eliminate the
    insurance at will after the injury but before judgment to prevent a tort claimant’s recovery
    from the insurer.” In support of this proposition, the Claimants cite a treatise, which
    observes (without citing supporting authority) that “[d]irect-action statutes have resulted
    from the current public policy that recognizes that a liability insurance policy is generally
    issued for the benefit of third parties who are injured and have a claim against the
    tortfeasor.” 7 COUCH ON INSURANCE § 104:8 (3d ed. 2003).
    We are not persuaded. If the General Assembly had intended to provide enforcement
    rights to tort claimants who have not obtained judgments or entered into approved
    settlements, it presumably would have drafted Maryland’s direct action statute differently.
    None of the authorities the Claimants cite convinces us otherwise. As the Insurers note,
    Corpus Juris Secundum states as the “general rule” that, “in the absence of policy or
    29
    statutory provisions to the contrary, one who suffers an injury which comes within the
    provisions of a liability insurance policy is not in privity of contract with the insurance
    company.” 46A C.J.S. Insurance § 1959, Westlaw (database updated May 2022). Thus, “a
    third party ordinarily may not directly sue an insurance company in an attempt to obtain
    the coverage allegedly due the insurer’s policyholder. The plaintiff is not in privity of
    contract with either the defendant or the defendant’s insurance company under the liability
    insurance policy and is not considered a third party beneficiary of the policy.” Id. (footnote
    omitted). If direct action statutes like Maryland’s reflected a public policy to allow all tort
    claimants to enforce general liability insurance policies, the “general rule” presumably
    would be that all claimants are third party beneficiaries of general liability insurance
    policies.
    As the Court of Special Appeals observed, there is a split of authority in other
    jurisdictions regarding whether injured tort claimants are intended third-party beneficiaries
    of liability policies. CX Reinsurance, 252 Md. App. at 14 & n.6. The out-of-state cases
    upon which the Claimants rely either are inapposite in that they concern automobile
    insurance12 or are not in keeping with our understanding of Maryland public policy. In
    particular, we note that, in Farm & City Ins. Co. v. Coover, 
    225 N.W.2d 335
     (Iowa 1975),
    the Supreme Court of Iowa stated:
    Iowa’s direct action statute gives an injured person who obtains a judgment
    the right to proceed against the insurer if his execution against the judgment
    debtor is returned unsatisfied. This right does not accrue until after judgment
    is obtained and an execution is returned unsatisfied. However, the statute
    gives the injured person an interest in the liability insurance policy adverse
    12
    See, e.g., Bossert v. Douglas, 
    557 P.2d 1164
     (Ok. Civ. App. 1976).
    30
    to both the insurer and insured at the time of the injury. The statute is
    designed to protect the injured person, not the insurer or insured. It does not
    permit the insurer and insured to do anything by litigation or agreement
    between them alone to abrogate or compromise coverage existing at the time
    of the accident.
    Id. at 337 (citations omitted).
    We do not read Maryland’s direct action statute as giving “the injured person an
    interest in the liability insurance policy adverse to both the insurer and insured at the time
    of the injury.” Reaching that conclusion would require a leap of logic that does not find
    support in the statutory language. Also, we do not subscribe to the proposition that, with
    respect to general liability insurance, Maryland’s direct action statute “does not permit the
    insurer and insured to do anything by litigation or agreement between them alone to
    abrogate or compromise coverage existing at the time of the accident.” As the Claimants
    acknowledge, “[f]or non-mandatory insurance policies, like the Policies here, an insurer
    can obtain a rescission judgment after a third party suffers a covered injury if the insurer
    establishes a material misrepresentation by the policyholder in its insurance application.”
    See North Am. Specialty Ins. Co. v. Savage, 
    977 F. Supp. 725
    , 730-31 (D. Md. 1997). The
    insurer need not join all known (and unknown) tort claimants to such an action before
    obtaining a judgment of rescission. That being the case, we see no reason why an insurer
    and insured must involve all known and unknown tort claimants in negotiations to
    effectively settle such an action, let alone obtain all such claimants’ consent to a settlement,
    provided that any such settlement is made in good faith.13 It follows that, if the settlements
    13
    At oral argument, counsel for the Insurers acknowledged the requirement of good
    faith in the settlement of lawsuits. See, e.g., Shenker v. Polage, 
    226 Md. App. 670
    , 687
    31
    of the rescission actions were made in good faith, they will be effective with respect to all
    claimants who are not intended beneficiaries of the Policies – in this case, the 12 Claimants
    who did not obtain judgments against the Landlords prior to the rescission case settlements.
    Finally, accepting the Claimants’ position would lead to undesirable consequences.
    We agree with the Insurers and Amicus Curiae Complex Insurance Claims Litigation
    Association that recognizing all known and unknown tort claimants as intended
    beneficiaries of general liability insurance policies will make it very difficult for insurers
    and policyholders to resolve rescission cases fully and finally, at least where the policies
    are likely to be claimed upon to cover damages awarded in “long-tail” tort cases (such as
    lead-paint cases). See Kenneth S. Abraham, The Long-Tail Liability Revolution, 6 U. PENN.
    J. LAW & PUB. AFF. 346, 348 (2021) (describing a “long-tail” claim as one that “involves
    tortious or other liability-creating conduct that causes latent bodily injury or property
    damage that then manifests itself only many years, and sometimes decades, after the harm-
    causing conduct occurred”). This would run contrary to Maryland’s “strong public policy
    to encourage settlement.” Matter of Collins, 
    468 Md. 672
    , 697 (2020). As the Insurers
    explain:
    [I]n order to reach a settlement with its insured that modifies an insurance
    policy, the insurer would have to identify and sue all claimants within the
    amorphous pool of potential personal injury claimants, many of whom are
    (2016). The parties dispute whether CX and the Landlords settled the rescission cases in
    good faith. The Claimants allege that the settlements were collusive. The Insurers claim
    that the Landlords vigorously defended the rescission cases, and that the settlements were
    the product of good-faith negotiations in light of both sides’ perceived litigation risks. For
    our purposes, it is sufficient to observe that the Insurers generated a factual dispute on this
    point, preventing the grant of summary judgment to the Claimants on this ground. On
    remand, the trier of fact will need to decide this question.
    32
    unknown, because they have not yet asserted claims. In this case, that pool
    would include not only all of the young children who resided in the insured
    properties during the policy periods, but also all of the young children who
    visited the insured properties during the policy periods. Claimants would
    assert that everyone who alleged any exposure, at any time, had a vested right
    upon first alleged exposure. There would be no practical means for an insurer
    or insured to determine who, if anyone, allegedly had been injured and when.
    In addition, we are concerned, as the Insurers put it, that “[b]y requiring this kind of
    massive litigation, without the prospect of settlement,” the Claimants’ position would
    “substantially reduce, and perhaps eliminate, rescission as a remedy for material
    representations in insurance applications, thereby undermining an insurer’s ability to
    obtain redress for an insured’s incomplete or inaccurate disclosures.”
    For all of these reasons, we are not persuaded that existing Maryland public policy
    makes all tort claimants intended beneficiaries of general liability insurance policies. If
    there is to be such a policy, the General Assembly will need to state it expressly through
    new legislation.
    IV
    Conclusion
    For the reasons discussed above, we hold that injured tort claimants who have yet
    to obtain a judgment against, or enter into an approved settlement with, an insured are not
    intended beneficiaries of general liability insurance policies, absent public policy
    modifications or contractual language to the contrary. As such, an injured tort claimant’s
    rights under this type of policy do not vest until the claimant has obtained a judgment
    against, or entered into a qualifying settlement with, an insured. In this case, the three
    Claimants who obtained judgments against their Landlords before the rescission case
    33
    settlements became intended beneficiaries of the Policies with the right to enforce their
    terms, as of the dates they obtained their verdicts in the trial court. The settlements of the
    rescission cases had no effect on the rights of those Claimants. We therefore affirm the
    judgment of the Court of Special Appeals as to Claimants Devon Johnson, Chauncey Liles,
    and Shyliyah Streeter on different grounds than articulated by the Court of Special Appeals.
    The Claimants who did not obtain final judgments against their Landlords prior to
    the applicable rescission case settlements were incidental beneficiaries of the Policies at
    the time of the settlements. To the extent those 12 Claimants since that time have obtained
    judgments against their Landlords or may do so in the future, they will not be permitted to
    enforce the pre-settlement terms of the Policies, provided that the settlements were made
    in good faith. Accordingly, we reverse the judgment of the Court of Special Appeals as to
    those 12 Claimants. On remand, the trier of fact shall decide whether CX and the Landlords
    settled the rescission cases involving those Claimants’ Landlords in good faith.
    JUDGMENT OF THE COURT OF
    SPECIAL APPEALS AFFIRMED IN PART
    AND REVERSED IN PART. THE CASE IS
    REMANDED TO THAT COURT WITH
    THE INSTRUCTION TO FURTHER
    REMAND THE CASE TO THE CIRCUIT
    COURT FOR BALTIMORE CITY FOR
    FURTHER PROCEEDINGS CONSISTENT
    WITH THIS OPINION. COSTS IN THE
    COURT OF SPECIAL APPEALS AND
    THIS COURT TO BE DIVIDED EQUALLY
    BETWEEN THE PARTIES.
    34