April 17, 2015
LINDA CONNORS, INDIVIDUALLY ETC.
GOVERNMENT EMPLOYEES INSURANCE COMPANY
Argued: February 9, 2015.
Certiorari to the Court of Special Appeals (Circuit Court for Montgomery County). Case No. 341803-V. Louise G. Scrivener, JUDGE.
JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED; COSTS TO BE PAID BY PETITIONERS.
ARGUED BY Amy M. Orsi, Stephen A. Markey, III (Law Offices of Stephen A. Markey, III, P.C. of Towson, MD) on brief FOR PETITIONERS.
ARGUED BY John B. Bratt, Esquire on Brief of Amicus Curiae the Maryland Association for Justice, Inc.
ARGUED BY Frank F. Daily (Sean P. Edwards, Law Offices of Frank F. Daily, P.A. of Hunt Valley MD) on brief FOR RESPONDENT.
ARGUED BEFORE Barbera, C.J., Harrell, Battaglia, Greene, Adkins, McDonald, Watts, JJ. Opinion by Harrell, J.
[442 Md. 470] Harrell, J.
The parties in this appeal--an insurance company and two of its insureds--disagree as to how to calculate the proceeds due to the insureds pursuant to the underinsured motorist provisions of their policy. The insureds argue that the express terms of the insurance contract mandate that the insurance company pay them $300,000. The insurance company argues instead that its insureds are owed only $100,000. To settle this dispute, we are called upon to interpret the subject policy. In so doing, we conclude that the policy is not ambiguous. We agree with the insurance company that the terms of the policy mandate that the insureds are owed $100,000.
I. Statement of Facts: The Accident
The facts are not in dispute. On 14 August 2009, Robert and Linda Connors (collectively, the " Connors," the " Plaintiffs," or the " Petitioners" ), husband and wife, took an ill-fated stroll in their Waldorf neighborhood. A motor vehicle operated by Adam Pond (" Pond" ), while backing out of a residential driveway at 3269 Captain Dament Drive, struck the Connors. [442 Md. 471] Plaintiffs alleged, in their subsequent Complaint, that, as she was struck, Linda Connors hit the vehicle with her hand and screamed, causing it to come to a stop. Pond saw allegedly Linda screaming on the ground and nonetheless resumed moving the vehicle again, backing over Robert Connors, as he attempted to flee the scene.
Both of the Connors sustained injuries. Robert sustained serious injuries to his head, including a traumatic brain injury, as well as injuries to his neck, body, and limbs. He was taken to Holy Cross Hospital for treatment of his injuries and transferred later to the Crofton Rehabilitation Center, where he died on 31 January 2011. Linda sustained injuries to her neck, back, leg, and arm, and also claimed emotional injuries incurred as a result of watching her husband being run-over.
At the time of the accident, the Connors together owned a vehicle insured by Government Employees Insurance Co. (" GEICO" ) under a Maryland Family Automobile Insurance Policy numbered 0377-86-55-06 (the " GEICO policy" or the " policy" ). GEICO concedes that both Robert and Linda Connors are " insureds" under the policy. The terms of the policy included underinsured motorist (" UIM" ) coverage of $300,000 per person/$300,000 per accident. Pond maintained automobile liability insurance with Allstate Insurance Co. (" Allstate" ), limited to $100,000 per person/$300,000 per accident. The record does not divulge the exact monetary amount of damages sustained by Robert and Linda Connors, although GEICO concedes that the total amount exceeds all available and collectable insurance. The Connors settled with Allstate for the limits of Pond's liability insurance after GEICO waived its rights of subrogation against Pond. Pursuant to this settlement, [442 Md. 472] Allstate paid $100,000 to Robert (before he died) and $100,000 to Linda.
Each of the Connors then submitted claims for underinsured motorist coverage to GEICO under the terms of their policy. The Connors sought $300,000 total from GEICO. GEICO agreed that the Connors were owed a total of $100,000 under the terms of the policy, but disputed the additional $200,000 claimed by them. Pursuant to an agreement reached between the parties, GEICO paid the Connors the $100,000 it agreed was owed them, with the understanding that the Connors could proceed with a Complaint for Declaratory Judgment as to the $200,000 in dispute.
II. Statement of the Case: The Lawsuit
On 16 December 2010, Robert and Linda Connors filed in the Circuit Court for Montgomery County a Complaint for Declaratory Judgment against GEICO, together with a motion for summary judgment. GEICO filed initially a motion to dismiss, which was denied summarily. GEICO filed then an answer, a cross-motion for summary judgment, and opposition to the Connors' motion for summary judgment.
The Circuit Court heard on 5 May 2011 arguments from all parties and ruled from the bench as to the pending motions and the Complaint. The trial judge agreed with GEICO's [442 Md. 473] interpretation of the policy, and determined that the Plaintiffs should recover only $100,000 from GEICO.
In an Order entered on 3 June 2011, the trial judge granted GEICO's cross-motion for summary judgment and denied the Connors' motion for summary judgment. In a Declaratory Judgment entered on 6 June 2011, the trial judge determined that (1) the Plaintiffs were insured under the GEICO policy and were entitled to collect UIM benefits under the policy; (2) the GEICO policy was not ambiguous and GEICO was obligated under the policy to pay the Connors $100,000 together in satisfaction
of their claims; and (3) GEICO's remaining UIM obligation:
is calculated by taking its $300,000 " per accident" limit under the GEICO Policy and subtracting all amounts received by Robert and Linda Connors that exhausted the tortfeasor's liability limits, which in this instance was $200,000. GEICO's remaining UIM obligation to Robert and Linda Connors is to fill the " gap" between what Robert and Linda Connors could have recovered from the tortfeasor had the tortfeasor maintained identical liability coverage to the coverage Robert Connors purchased under the GEICO Policy. That " gap" is $100,000 which, as noted, has been paid.
On 9 June 2011, the Petitioners filed a Notice of Appeal. The Court of Special Appeals, in a reported opinion, affirmed the judgment of the trial court. Connors v. Government Employees Insurance Co., 216 Md.App. 418, 421, 88 A.3d 162, 164 (2014).
Petitioners filed a Petition for Writ of Certiorari, which we granted on 18 July 2014. In their Petition, they asked us to consider the following question solely:
Do the underinsured motorist provisions of GEICO's insurance contract provide the Petitioners, Linda Connors Individually and Linda Connors as Personal Representative of the Estate of Robert Connors, a limit of underinsured coverage of $300,000 each, subject to an aggregate payment to all Petitioners' claims by GEICO not to exceed $300,000?
[442 Md. 474] Connors v. Government Employees Insurance Co., 439 Md. 327, 96 A.3d 143 (2014).
III. Standard of Review
When we consider a declaratory judgment in tandem with the grant of summary judgment, and no material facts are in dispute, we consider " whether that declaration was correct as a matter of law." Springer v. Erie Ins. Exchange, 439 Md. 142, 155-56, 94 A.3d 75, 83 (2014) (internal quotations omitted); see Catalyst Health Solutions, Inc. v. Magill, 414 Md. 457, 471, 995 A.2d 960, 968 (2010). Whether the trial court granted properly summary judgment is a question of law, which we review without deference. River Walk Apartments, LLC v. Twigg, 396 Md. 527, 541-42, 914 A.2d 770, 778-79 (2007); see Standard Fire Ins. Co. v. Berrett, 395 Md. 439, 450, 910 A.2d 1072, 1079 (2006).
A. Relevant Statutory Scheme
Maryland law requires every motor vehicle insurance policy issued in Maryland to contain minimum uninsured motorist coverage. Maryland Code (1997, 2011 Repl. Vol.), Insurance Article, § 19-509; see Waters v. U.S. Fidelity & Guaranty Co., 328 Md. 700, 710, 616 A.2d 884, 888 (1992). In 1981, the UIM statutory scheme was amended to allow insureds to contract for more than the statutory minimum amount of coverage, should they desire to do so. 1981 Md. Laws, Chap. 510; see Hoffman v. United Services. Auto. Ass'n, 309 Md. 167, 178, 522 A.2d 1320, 1325 (1987). At the time of the [442 Md. 475] Connors' accident, each Maryland motor vehicle liability
policy had to contain a minimum of $20,000 coverage for injury or death of any one person in an accident, a minimum of $40,000 in coverage for injury or death of two or more people in an accident, and a minimum of $15,000 in coverage for property damage resulting from any one accident. Maryland Code (1977, 2009 Repl. Vol.), Transportation Article II, § 17-103.
The general purpose of Maryland's UIM statutory scheme is to " provide minimum protection for individuals injured by uninsured motorists and should be liberally construed to ensure that innocent victims of motor vehicle collisions are compensated for their injuries." Brethren Mut. Ins. Co. v. Buckley, 437 Md. 332, 347, 86 A.3d 665, 673 (2014) (citing Erie Ins. Exch. v. Heffernan, 399 Md. 598, 612, 925 A.2d 636, 644 (2007)). Specifically, Maryland's UIM scheme is designed to " provide an injured insured with resources equal to those which would have been available had the tortfeasor carried liability coverage equal to the amount of uninsured motorist coverage which the injured insured purchased from his own insurance company." Waters, 328 Md. at 714, 616 A.2d at 890. Maryland is, accordingly, a " gap theory" state--the injured insureds may recover the difference between their UIM coverage and money received from the tortfeasor. The uninsured motorist statutory scheme and the policy in effect between the parties in this case is consistent with Maryland's identity as a gap theory state.
[442 Md. 476]B. The Connors' Policy
The relevant portions of the GEICO policy are:
SECTION IV--UNINSURED MOTORISTS COVERAGE
. . .
LOSSES WE WILL PAY
We will pay damages for bodily injury and property damage caused by an accident
which the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle arising out of the ownership, maintenance or use of that vehicle.
. . .
LIMITS OF LIABILITY
Regardless of the number of insureds, autos or trailers to which this policy applies:
1. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to " each person" [442 Md. 477] is the limit of our liability for all damages, including those for care or loss of service, due to bodily injury sustained by one person as the result of one accident. [Hereinafter, we refer to this provision as " subsection (1)." ]
2. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to " each accident" is, subject to the above provision respecting each person, the total limit of our liability for all such damages including damages for care and loss of services, due to bodily injury sustained by two or more persons as the result of one accident. [Hereinafter, we refer to this provision as " subsection (2)." ]
. . .
4. . . .
The amount payable under this coverage will be reduced by all amounts:
(a) Paid by or for all persons or organizations liable for the injury;
(b) Paid under the Bodily Injury and Property Damage coverages of this policy;
(c) Recovered under any workers' or workmen's compensation law, disability benefits law or any similar law, exclusive of non-occupational disability benefits; or
(d) Paid under a property insurance policy.
[Hereinafter, we refer to this provision as " subsection (4)." ]
(emphasis added in subsection (2)). Finally, the " DEFINITIONS" portion of " SECTION IV--UNINSURED MOTORISTS COVERAGE" includes the following statement in the middle of its definition of an uninsured motor vehicle:
The limit of our liability is the amount of Uninsured Motorists coverage as stated in the Declarations less the amount paid to the insured that exhausts any applicable liability insurance policies, bonds, and securities on behalf of any [442 Md. 478] person who may be held liable for the bodily injury or death of the insured.
C. The Parties' Arguments
The parties have provided us with various formulas by which to calculate the benefits due to the Connors under the terms of their policy. By our count, the parties' disagreement centers on two alleged ambiguities in the contract. First, the parties dispute the proper interplay between subsections (1) and (2). Second, the parties appear to dispute (but not as vigorously) the point at which subsection (4) comes into play.
The Connors suggest the following interpretation and calculation: The Connors begin their analysis with subsection (1), which mandates a $300,000 limit for " each person" resulting from " one accident." The Connors suggest that the " subject to" language in subsection (2) makes the $300,000 limit governing " each accident" subservient to the $300,000 limit for " each person" from subsection (1). If subsection (2) is subject to subsection (1), then " [e]ach individual claimant's recovery is limited to the per-person limits, with the maximum payout for the occurrence limited to the per-occurrence limit." The Connors summarize their position: " [The policy] states when [442 Md. 479] more than one person is injured it will pay up to the per person limit, less payments to that person, with a cap of $300,000 for all payments from GEICO for one accident."  Accordingly, the Connors argue that the benefits owed should be calculated as follows:
Estate of Robert Connors:
$300,000 [GEICO's per person UIM coverage]
-$100,000 [Payment from Allstate]
= $200,000 [GEICO's remaining coverage]
$300,000 [GEICO's per person UIM coverage]
-$100,000 [Payment from Allstate]
= $200,000 [GEICO's remaining coverage]
$200,000 owed to the Estate of Robert Connors $200,000 owed to Linda Connors = $400,000 total owed
$400,000 is adjusted to $300,000 pursuant to the $300,000 per accident cap from subsection (2).
-$100,000 [Amount GEICO already agreed to pay]
= $200,000 still owed by GEICO
GEICO suggests a much different method of calculation is appropriate. GEICO asserts that " subsection (1) simply is not the relevant provision to analyze when
more than one person or insured is injured in one accident," and so begins instead its analysis with subsection (2). As the " per occurrence" limit of subsection (2) is $300,000 in this case, GEICO argues that " [f]rom this $300,000 limit, the GEICO policy dictates that the amount is reduced by all amounts paid by the tortfeasor, which in this instance is $200,000 . . . ." Accordingly, GEICO argues that the benefits owed should be calculated as follows:
[442 Md. 480] The amount of both Connors' individual injuries (which GEICO concedes exceeds the policy limits) is adjusted to $300,000 pursuant to the $300,000 per accident cap.
-$200,000 [Payments from Allstate to both Connors]
= $100,000 [Amount GEICO already agreed to pay]
The trial court and the Court of Special Appeals agreed with GEICO's method of calculating the UIM benefits due to the Connors pursuant to the policy.
D. Our Interpretation
As a general rule, we interpret the language of an insurance policy with the same principles and rules of construction that we use to interpret other contracts. See DeHaan, 393 Md. at 193, 900 A.2d at 225-26; Megonnell v. United States Auto Ass'n, 368 Md. 633, 655, 796 A.2d 758, 772 (2002); Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305, 753 A.2d 533, 537 (2000). Like any other contract, an insurance contract is " measured by its terms unless a statute, a regulation, or public policy is violated thereby." Pacific Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 488 (1985). We give the words of insurance contracts their customary, ordinary, and accepted meaning, as determined by the fictional " reasonably prudent lay person." Beale v. Am. Nat'l Lawyers Ins. Reciprocal, 379 Md. 643, 660, 843 A.2d 78, 89 (2004). When contractual language is plain and unambiguous, we enforce the terms of the contract as a matter of law. Calomiris v. Woods, 353 Md. 425, 445, 727 A.2d 358, 368 (1998); Pacific Indem. Co., 302 Md. at 389, 488 A.2d at 489. When interpreting contracts,
the contract must be construed in its entirety and, if reasonably possible, effect must be given to each clause so that a court will not find an interpretation which casts out or disregards a meaningful part of the language of the writing unless no other course can be sensibly and reasonably followed.
Cochran v. Norkunas, 398 Md. 1, 17, 919 A.2d 700, 710 (2007). If the language of the contract is ambiguous, we may turn to [442 Md. 481] extrinsic evidence to determine the intent of the parties. Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 390 Md. 449, 459, 889 A.2d 387, 393 (2006); Pacific Indem. Co., 302 Md. at 389, 488 A.2d at 489. A policy term is considered " ambiguous if, to a reasonably prudent person, the term is susceptible to more than one meaning." Cole, 359 Md. at 305-06, 753 A.2d at 537.
Some of our sister states maintain that insurance policies should, as a matter of course, be construed against the insurer. Megonnell, 368 Md. at 655, 796 A.2d at 771. Maryland does not follow this rule. Id. Instead, in the event that
[442 Md. 483] an insurance policy contains ambiguous language, we construe that language " liberally in favor of the insured and against the insurer as drafter of the instrument." Megonnell, 368 Md. at 655, 796 A.2d at 772 (emphasis in original) (internal quotations omitted); see Clendenin Bros., 390 Md. at 459-60, 889 A.2d at 394; Collier v. MD-Individual Practice Ass'n, 327 Md. 1, 5, 607 A.2d 537, 539 (1992); see also Empire Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co., 117 Md.App. 72, 98 n.10, 699 A.2d 482, 494 n.10 (1977) (" Maryland courts first ascertain the intent of the parties from the policy as a whole, considering extrinsic and parol evidence to construe any ambiguity. Only if either no extrinsic or parol evidence is introduced or if an ambiguity still remains after the examination of extrinsic evidence will Maryland courts construe a policy against an insurer." (citations omitted)).
In this case, the policy is not ambiguous and therefore we may enforce the terms of the policy as a matter of law. For ease of reference, we reproduce here subsections (1) and (2) as our point of departure for our explication of why there is no ambiguity:
1. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to " each person" is the limit of our liability for all damages, including those for care or loss of service, due to bodily injury sustained by one person as the result of one accident.
2. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to " each accident" is, subject to the above provision respecting each person, the total limit of our liability for all such damages including damages for care and loss of services, [442 Md. 484] due to bodily injury sustained by two or more persons as the result of one accident.
emphasis added in subsection (2)).
Subsection (2) addresses the " limit of liability" in situations where " bodily injury" was " sustained by two or more persons as the result of one accident." Subsection (2) refers, however, to subsection (1) by its own terms and ensures therefore that something about subsection (1) impacts the meaning of subsection (2). The Connors contend that the two commas " convert the statement into the qualifying clause." The Connors argue further that the " plain language of the policy makes clear that the 'per occurrence' provision is subject to the 'per person' provision. The 'per occurrence' provision is subject to what is in between the commas, which makes the 'per person' provision the main clause dictating the calculation of coverage of UIM benefits." GEICO, on the other hand, accuses the Connors of " reading out" the comma between " is" and " subject," which, in GEICO's view, " converts the 'subject to the above provisions respecting each person' into a qualifying clause that makes it 'subservient to' the per occurrence limit, not the other way around." Practically speaking, GEICO argues that the " subject
to" language " simply restricts an individual insured, involved in an accident where the 'per occurrence' limit is invoked, from individually recovering more than the 'per person' limits." (emphasis in original).
Despite spending numerous pages debating the fine points of grammar and the proper labels to give to various clauses, [442 Md. 485] the parties agree practically on the interplay between the two provisions. The " subject to" clause present in subsection (2) incorporates subsection (1)'s per person limits and says simply that when two or more persons sustain bodily injury as the [442 Md. 486] result of one accident, the " per person" limits of the policy discussed in subsection (1) apply still. The following hypothetical highlights similarities in the parties' arguments:
Suppose the Connors had a policy with GEICO in effect at the time of the accident with fictional policy limits of $100,000 per person and $300,000 per occurrence. Bracketing for the moment any potential contribution from the tortfeasor, both parties agree that the Connors could recover collectively no more than the $300,000 per accident limit. Both parties agree further that the per accident limit of subsection (2) is " subject to" subsection (1) in the sense that the " per person" limits apply still in the " per accident" context where more than one person is injured. Specifically, in our hypothetical, although the per accident limit is $300,000, each of the Connors would be subject to the $100,000 per person limit and could therefore recover collectively only $200,000. On this much, the parties agree. The terms of the hypothetical policy unambiguously command that result. In order to calculate the amount payable under subsection (2), then, the parties must calculate first the amount payable to each individual person had they been the only insured involved hypothetically in the accident, pursuant to subsection (1). Those individual amounts calculated under subsection (1) are then subjected to the " cap" of subsection (2).
The policy held by the Connors had policy limits of $300,000 per person and $300,000 per occurrence. Again, bracketing any potential contributions from the tortfeasor, if the value of the Connors' claims exceeded $300,000 each as it did here, the method for calculating the proceeds due to the Connors from GEICO proceeds the same as in the hypothetical. It just so happens that the end result is the same because the limits are the same--bracketing any contributions from Allstate, the Connors may recover together no more than the $300,000 per accident limit.
In our view, the actual dispute between the parties is, at its heart, over the point in time at which the contributions from Pond's insurance carrier are taken into account. At two [442 Md. 487] separate points the policy mandates that GEICO's liability is reduced by whatever payments Pond's carrier made to the Connors. Subsection (4) provides " [t]he amount payable under this coverage will be reduced by all amounts: (a) [p]aid by or for all persons or organizations liable for the injury . . . ." Also, the definition of " uninsured motor vehicle" notes that the limit of GEICO's liability is " the amount of Uninsured Motorists coverage as stated in the Declarations less the amount paid to the insured that exhausts any applicable liability insurance policies, bonds, and securities on behalf of any person who may be held liable for the bodily injury or death of the insured." (emphasis removed).
Subsection (4) provides that the " amount payable under this coverage" will be reduced by payments received from persons or organizations liable for the injury, such as Allstate on behalf of Pond. We interpret the phrase " this coverage" to refer to the uninsured motorist coverage generally. Therefore, once the parties get through the calculations and caps of subsection (1) and (2) and arrive at a penultimate number, they are required at that point by subsection (4) to " credit" payments made by other entities such as Allstate. This is the final amount owed by GEICO. This understanding of subsection (4) is confirmed by the policy's definition of " uninsured motor vehicle," which mandates that any other amount paid to the insured of any person who may be held liable for the bodily injury or death of the insured be deducted from the amount calculated pursuant to the declarations.
We conclude that the policy is not ambiguous and the terms of the policy mandate
that the total damages due to the Connors as a couple are capped at $300,000 pursuant to the per accident limit of the policy. Allstate has paid already each of the Connors $100,000, which amounts are deducted from the amount that GEICO would be required otherwise to pay the Connors pursuant to subsection (4). Accordingly, GEICO is responsible for the remaining $100,000, which has been paid already to the Connors.
[442 Md. 488] JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED; COSTS TO BE PAID BY PETITIONERS.