Berry & State Farm v. Queen

Desiree Berry and State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Co. v. Andrae Queen, and others similarly situated., Misc. No. 10, September Term, 2019; Maryland Insurance Administration v. State Farm Mutual Automobile Insurance Co., No. 63, September Term, 2019. Opinion by Getty, J. INSURANCE LAW—UNINSURED MOTORIST STATUTE—STATUTORY INTERPRETATION—DAMAGE TO PROPERTY The Court of Appeals held that the phrase “damage to property”—as incorporated by Maryland’s Uninsured Motorist Statute—includes loss of use damages such as rental costs because of the ordinary and popular meaning of the words “damage” and “property,” this Court’s prior interpretation of property damage, and the context and purpose of the uninsured motorist statute. United States District Court IN THE COURT OF APPEALS for the District of Maryland Case No. 1:18-cv-02625-PWG OF MARYLAND Circuit Court for Baltimore City Case No. 24-C-19-001819 Misc.

No. 10 and No. 63 September Term, 2019 Argued: May 28, 2020 ______________________________________ DESIREE BERRY AND STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND STATE FARM FIRE AND CASUALTY CO. v. ANDRAE QUEEN, and others similarly situated. ______________________________________ MARYLAND INSURANCE ADMINISTRATION v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO. ______________________________________ Barbera, C.J. McDonald, Watts, Hotten, Getty, Booth, Biran, JJ. ______________________________________ Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Suzanne Johnson Opinion by Getty, J. 2020-07-27 13:49-04:00 ______________________________________ Filed: July 27, 2020 Suzanne C. Johnson, Clerk The cost of automobile accidents is high, whether it be measured in lives lost, injuries inflicted, or damage to property. The . . . monetary loss of the victims of automobile accidents [is] exacerbated by situations where one or more of the parties involved turned out to be uninsured. - Report of the Task Force on Maryland Automobile Insurance In the early 1980s, the Maryland General Assembly sought to combat a growing statewide problem: the increased prevalence of uninsured motorists on state roads and highways. A. Janquitto, Maryland Motor Vehicle Insurance (3d ed. 2011), § 3.12(A) at 66–70.

Initially, the House Economic Matters Committee formed an insurance task force in 1982. The task force conducted an interim study to recommend ways to enforce Maryland’s compulsory insurance laws and reduce the high number of uninsured motorists through new legislative proposals. See Final Report of the Insurance Task Force of the House Economics Matters Committee (January 1983), http://dlslibrary.state.md.us/publications/house/EM/MdE2352.3.F491_1983.pdf (last visited on July 21, 2020), archived at https://perma.cc/UF89-KEVV. In 1984, the General Assembly’s Legislative Policy Committee created a bicameral task force to make additional recommendations, such as “[r]efining existing procedures for identifying uninsured motorists in order to minimize the burden on the general motoring public.” See Report of the Task Force on Maryland Automobile Insurance 2 (December 1984), http://mdlaw.ptfs.com/awweb/pdfopener?md=1&did=8682 (last visited on July 21, 2020), archived at https://perma.cc/C5F9-SE32.

The General Assembly’s strong policy determinations that followed these reports have resulted in legislation, over the ensuing forty years, expanding Maryland’s Uninsured Motorist Statute to its present state. Md. Code (1957, 2017 Repl. Vol., 2019 Supp.), Insurance (“IN”) §§ 19-509 to 19-511.1 Desiree Berry & State Farm Mutual Automobile Insurance Company & State Farm Fire and Casualty Company v. Andrae Queen (“Misc. No. 10”) and Maryland Insurance Administration v. State Farm Mutual Automobile Insurance Company (“No. 63”) arrived in this Court by different procedural vehicles.

Misc. No. 10 is a certified question from the United States District Court for the District of Maryland. No. 63 is an appeal from the Circuit Court of Baltimore City; we granted certiorari while the matter was pending in the Court of Special Appeals. While these appeals have not been formally consolidated, the Court set both matters for oral argument on the same day.

Due to the similarity in the underlying facts, and identical legal issue presented in both Misc. No. 10 and No. 63, we issue one opinion. In both cases, we must determine whether the phrase “damage to property,” incorporated by reference in the uninsured motorist statute, requires an insurer to reimburse loss of use damages, such as rental car costs, to an insured. To answer this question, our analysis begins with the ordinary and popular meaning of the words “damage” and “property.” Both legal and non-legal sources confirm that these words, together, connote a loss of one’s ability to use an object.

Building on this common understanding, our 1 For a more detailed explanation of Maryland’s Uninsured Motorist Statute’s legislative history, consult Nationwide Mutual Insurance Co. v. Shilling, 468 Md. 239 , 249–54 (2020). 2 analysis examines this Court’s earlier jurisprudence interpreting property damage and related legislation. Two particular cases guide us. This Court’s prior articulation of the measure of damages where personal property is injured but not destroyed, beginning in Washington, Baltimore & Annapolis Electric Railway Co. v. William A. Fingles, Inc., 135 Md. 574 (1920), confirms that loss of use damages are part and parcel of “damage to property.” Indeed, this Court applied that principle to the uninsured motorist statutory scheme in D’Ambrogi v. Unsatisfied Claim & Judgment Fund Board, 269 Md. 198 (1973). There, we held that loss of use damages were recoverable under the predecessor statute to Maryland’s Automobile Insurance Fund (“MAIF”) because such damages were encompassed in the phrase “damage to property.” Finally, as with any exercise of statutory interpretation, we view the phrase in the context and purpose of the larger statutory scheme.

Here, such a reading undoubtedly leads this Court to conclude that the phrase “damage to property” includes loss of use damages. BACKGROUND We recently explained that “[u]ninsured and underinsured[2] motorist coverage is a statutorily required component of every motor vehicle liability insurance policy issued in Maryland.” Nationwide Mut. Ins. Co. v. Shilling, 468 Md. 239, 242 (2020). “This mandatory coverage protects insured drivers involved in motor vehicle accidents from 2 These terms are synonymous.

See Shilling, 468 Md. at 248–49 (citation omitted) (“[A]n uninsured motorist or motor vehicle is, for all intents and purposes, the same as an underinsured motorist or motor vehicle.”). 3 paying out-of-pocket expenses when the liable party, a tortfeasor, is either completely uninsured or inadequately insured to cover the extent of the insured’s injuries.” Id. The underlying facts of these cases do not affect our analysis. Still, we briefly summarize them for context. Misc.

No. 10 The following information is derived from the U.S. District Court’s Certification Order. Andrae Queen owned a car and obtained a motor vehicle liability insurance policy through State Farm Fire and Casualty Company (“State Farm”). Mr. Queen did not purchase the optional rental car coverage as a part of the policy. On February 15, 2018, an uninsured motorist struck Mr. Queen while he was operating his car in St. Mary’s County, Maryland.

The accident damaged Mr. Queen’s vehicle. As a result, Mr. Queen obtained a rental car—which cost $306.23—while his car was being repaired. Mr. Queen submitted a claim with State Farm under the Uninsured Motor Vehicle Property Damage Coverage3 portion of his policy to recover his rental car expenditure. State Farm denied the claim.

Mr. Queen filed suit against State Farm in the Circuit Court for Baltimore City on behalf of himself and sought to proceed as a class action. State Farm removed the action 3 The Uninsured Motor Vehicle Property Damage Coverage portion of Mr. Queen’s policy provides for coverage of “Bodily Injury” and “Property Damage” and defines property damage as follows: Property Damage means damage to or destruction of: 1. your car or a newly acquired car; and 2. property owned by an insured while contained in your car or a newly acquired car. 4 to the United States District Court for the District of Maryland and filed a motion to dismiss. In a Memorandum Opinion and Order, the U.S. District Court denied State Farm’s motion. See Queen v. State Farm Mut.

Auto. Ins. Co., No. PWG-18-2625, 2019 WL 2568336 (D. Md. June 20, 2019). The U.S. District Court determined that under Maryland law, “[Mr.] Queen ha[d] stated plausible claims, notwithstanding the unambiguous language of the [State Farm Insurance] Policy excluding the coverage [Mr.] Queen demand[ed].” Id. at ⁵.

The U.S. District Court ordered State Farm to answer Mr. Queen’s complaint. At State Farm’s request, the U.S. District Court then certified a question of law to this Court pursuant to the Maryland Uniform Certification of Questions of Law Act. Md. Code (1957, 2013 Repl. Vol.), Courts & Judicial Proceedings § 12-601 et seq.

This Court accepted the certified question on November 22, 2020. State Farm filed, with Mr. Queen’s consent, a motion to accelerate the briefing schedule and set the matter for oral argument with No. 63, which we granted on December 10, 2019. No. 63 The following information is derived from the Joint Stipulation of Facts agreed upon by the Maryland Insurance Administration (the “Administration”) and State Farm.4 Arndrea Hoyle owned a car and obtained a motor vehicle liability insurance policy through (Emphasis in original). 4 We see no principled reason to distinguish “State Farm” of Misc. No. 10 and “State Farm” of No. 63.

In the discussion below, we refer to a singular “State Farm.” In both cases, State Farm is represented by the same counsel and makes principally the same arguments. 5 State Farm. Ms. Hoyle’s policy included the following coverage: (1) Car Rental Expense Coverage,5 providing eighty percent of car rental expenses up to the $1,000 limit; (2) 5 In pertinent part, the policy provides: PHYSICAL DAMAGES COVERAGE This policy provides: 4. Car Rental and Travel Expenses Coverage if “R1” is shown under the “SYMBOLS” on the Declarations Page. Insuring Agreements 4.

Car Rental and Travel Expenses Coverage a. Car Rental Expense We will pay the daily rental charge incurred when you rent a car from a car business while your car . . . is: (2) being repaired . . . as a result of a loss which would be payable under . . . Collision Coverage. Limits – Car Rental and Travel Expenses Coverage 1.

Car Rental Expense The limit for Car Rental Expense is shown on the Declarations Page under “Limit – Car Rental Expense – Each Day, Each Loss. a. The limit shown under “Each Day” is the most we will pay for the daily rental charge. If: (1) a dollar amount is shown, then we will pay the daily rental charge up to that dollar amount; or (2) a percentage amount is shown, then we will pay that percentage of the daily rental charge. (Emphasis in original). 6 Collision Coverage,6 with a $250 deductible; and (3) Uninsured Motorist Coverage, with a $250 deductible.7 The uninsured motorist coverage obligated Ms. Hoyle to pay a separate premium charge of $55.59 per policy period, which she paid.

On January 5, 2018, an unidentified vehicle struck and damaged Ms. Hoyle’s car while it was parked and unoccupied. That same day, Ms. Hoyle submitted a claim with State Farm. State Farm responded with a coverage letter, which stated, in pertinent part: 6 In pertinent part, the policy provides: PHYSICAL DAMAGES COVERAGE This policy provides: 2. Collision Coverage is [sic] “G” is shown under the “SYMBOLS” on the Declarations Page.

Insuring Agreements 2. Collision Coverage a. We will pay the loss caused by collision to a covered vehicle. (Emphasis in original). 7 In pertinent part, the policy provides: UNINSURED MOTOR VEHICLE COVERAGE Insuring Agreement We will pay compensatory damages for bodily injury and property damage an insured is legally entitled to recover from the owner or driver of an uninsured motor vehicle.

Limits 2. Property Damage The Uninsured Motor Vehicle Coverage limit for property damage is shown under the Declarations Page under 7 The policy provides uninsured motorist property damage coverage for property damages you are legally entitled to collect from the owner or driver of an uninsured motor vehicle. Damages may include the repair costs, actual cash value of the property and diminished value, if any. Based upon our investigation, your uninsured motorist property damage coverage will apply to this loss.

State Farm paid Ms. Hoyle $369.78 pursuant to the policy’s Collision Coverage provision for property damage to the vehicle.8 While Ms. Hoyle’s car was being repaired, she rented a replacement from Hertz Corporation, a car rental agency. In total, the rental car cost $264.07. State Farm paid Hertz directly in the amount of $208.40: eighty percent of the daily rental rate, plus tax, “Uninsured Motor Vehicle Coverage – Property Damage Limit – Each Accident.” This limit is the most we will pay for all property damage resulting from any one accident. “Property Damage” is specifically defined in the Policy as: damage to or destruction of: (1) your car or a newly acquired car; and (2) property owned by an insured while contained in your car or a newly acquired car. Exclusions THERE IS NO COVERAGE: 8.

FOR THE FIRST $250 OF PROPERTY DAMAGE RESULTING FROM ONE ACCIDENT. 8 The policy also contains a nonduplication provision, which provides: We will not pay under Uninsured Motor Vehicle Coverage any damages: 2. that are property damages and could have been paid or could be paid to or for the insured: c. under any policy of property insurance. 8 pursuant to the Car Rental Expense provision of the policy. State Farm did not pay Ms. Hoyle the balance—$55.67—which represented twenty percent of the total rental car expense. Ms. Hoyle filed an administrative complaint with the Administration, which reviewed the complaint and issued a determination letter on April 27, 2018. In the letter, the Administration concluded that State Farm acted without just cause and in an arbitrary and capricious manner when it denied Ms. Hoyle’s claim for rental car expenses.

See IN §§ 4-113 and 27-303(2). Therefore, the Administration directed State Farm to pay Ms. Hoyle’s out-of-pocket rental expenses. State Farm disagreed and requested a hearing before an administrative law judge. The Administration and State Farm filed Cross Motions for Summary Decision, acknowledging that there was no dispute of fact and the only issue for resolution involved whether State Farm violated IN §§ 4-113 and 27-303(2).

The parties appeared for an administrative hearing on January 24, 2019. One month later, the Associate Insurance Commissioner issued a Final Order granting the Administration’s Motion for Summary Decision and denying State Farm’s Motion for Summary Decision. The Associate Commissioner’s order affirmed the Administration’s initial determination. State Farm filed a petition for judicial review in the Circuit Court for Baltimore City.

The circuit court held a hearing on September 25, 2019. After reviewing the parties’ filings and hearing argument, the circuit court determined that the Associate Commissioner premised its decision on an error of law. As a result, the circuit court entered summary decision in favor of State Farm. The Administration noted an appeal to the Court of Special 9 Appeals.

While still pending in that court, we granted certiorari. Md. Ins. Admin. v. State Farm Mut. Auto.

Ins. Co., 466 Md. 513 , 513 (2019). Question Presented Both cases present a single, identical question of law for this Court’s review: Whether the Maryland Uninsured Motorist statutory provision of Md. Code Ann., Ins. §19-509 (e)(1), and the provisions of Title 17 of the Transportation Article [(“TR”)] and Title 20 Subtitle 6 of the Insurance Article incorporated therein, require an insurer to pay benefits for loss of use of a vehicle damaged by an uninsured driver, regardless of any limitations or omissions that may exist in the applicable policy of insurance. For the reasons that follow, we hold that the phrase “damage to property,” as incorporated by reference in the uninsured motorist statute, embraces loss of use damages.

Consequently, an insurer is required to provide uninsured motorist coverage for loss of use damages, such as rental costs, caused by an uninsured driver, regardless of a policy’s limitations or purported omissions to the contrary. DISCUSSION A. The Parties’ Contentions. Misc. No. 10 State Farm contends that the uninsured motorist statute is unambiguous and fails to provide for loss of use damages.

State Farm’s argument focuses less on the express language of the statute and more on text it believes is missing. Specifically, State Farm asserts that the words “loss of use” or “rental car coverage” must explicitly appear in the statute for it to cover such damages. State Farm distinguishes D’Ambrogi as inapplicable 10 because that case interpreted now-inapplicable statutory language since replaced by the statutory scheme implicated in the instant case. Mr. Queen counters that the term “damage to property,” as it has been defined in our case law, recognizes recovery for loss of use damages.

In Mr. Queen’s view, this Court’s interpretation of MAIF’s predecessor statute in D’Ambrogi is instructive. More broadly, Mr. Queen contends that the uninsured motorist statute’s remedial nature encourages a liberal construction to effectuate its purpose; i.e., assuring that innocent victims recover when injured at the hands of uninsured motorists. No. 63 The Administration argues that the Associate Commissioner properly interpreted IN § 19-509 and TR § 17-103. The Administration contends that IN § 19-509 requires an insurer to provide uninsured motorist coverage equal to the liability coverage all Maryland drivers must maintain under Title 17 of the Transportation Article.

In turn, the minimum liability coverage requirements of TR § 17-103 provide for reasonable rental car expenses—i.e., loss of use damages—when an innocent claimant’s car is being repaired. Against this statutory framework, the Administration maintains that State Farm’s denial of Ms. Hoyle’s claim for loss of use damages was arbitrary and capricious because the denial was not undertaken pursuant to a lawful principle. State Farm counters with the language of Ms. Hoyle’s motor vehicle insurance policy; specifically, that the uninsured motorist provisions of the policy do not include rental car expenses. More broadly, State Farm responds that the uninsured motorist statute clearly and unambiguously does not provide coverage for loss of use damages.

In State 11 Farm’s view, it is not responsible for loss of use damages because (1) the text of the statute does not explicitly include “loss of use”; (2) the phrase “damage to property” cannot be defined as including loss of use; and (3) the General Assembly could have included coverage for “damages resulting from” property damage, but it did not. Finally, State Farm asserts that its denial of Ms. Hoyle’s claim for rental expenses was not arbitrary and capricious; rather, that it denied coverage according to a lawful principle. B. Principles of Statutory Interpretation. Before engaging with the statutory language, we reiterate the pertinent guiding principles of statutory interpretation.

The interpretation of a statute is a question of law that this Court reviews de novo. Johnson v. State, 467 Md. 362, 371 (2020). Our chief objective is to ascertain the General Assembly’s purpose and intent when it enacted the statute. Neal v. Balt.

City Bd. of Sch. Comm’rs, 467 Md. 399, 415 (2020) (citing Wash. Gas Light Co. v. Md. Pub. Serv.

Comm’n, 460 Md. 667, 682 (2018)). It is well established that [t]his Court provides judicial deference to the policy decisions enacted into law by the General Assembly. We assume that the legislature’s intent is expressed in the statutory language and thus our statutory interpretation focuses primarily on the language of the statute to determine the purpose and intent of the General Assembly. We begin our analysis by first looking to the normal, plain meaning of the language of the statute, reading the statute 12 as a whole to ensure that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.

Brown v. State, 454 Md. 546 , 550–51 (2017) (quoting Phillips v. State, 451 Md. 180 , 196– 97 (2017)). Our inquiry is not confined to the specific statutory provision at issue on appeal. Neal, 467 Md. at 415 . Instead, “[t]he plain language ‘must be viewed within the context of the statutory scheme to which it belongs, considering the purpose, aim or policy of the Legislature in enacting the statute.’” Johnson, 467 Md. at 372 (quoting State v. Johnson, 415 Md. 413, 421 (2010)).

To this end, it may be beneficial to “analyze the statute’s ‘relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.’” Blackstone v. Sharma, 461 Md. 87, 114 (2018) (quoting Kaczorowski v. Mayor & City Council of Balt., 309 Md. 505, 515 (1987)). While not necessary in every instance, we often find it prudent to scrutinize the legislative history to confirm that our interpretation of the statute’s plain language accords with the legislature’s intent. Neal, 467 Md. at 415–16; see also In re: S.K., 466 Md. 31 , 50 (2019) (“In addition to the plain language, the modern tendency of this Court is to continue the analysis of the statute beyond the plain meaning to examine ‘extrinsic sources of legislative intent’ in order to ‘check [ ] our reading of a statute’s plain language’ through examining ‘the context of a statute, the overall statutory scheme, and archival legislative history of relevant enactments.’” (alteration in original) (quoting Brown, 454 Md. at 551 )); 13 State v. Roshchin, 446 Md. 128, 140 (2016) (“[E]ven when the language is unambiguous, it is useful to review legislative history of the statute to confirm that interpretation and to eliminate another version of legislative intent alleged to be latent in the language.”). C. The Term “Damage to Property” Includes “Loss of Use.” Our analysis begins by discerning the ordinary and popular meaning of the words we seek to interpret: “damage” and “property.” Words, however, often have multiple meanings.

As a result, we look to the context in which the words are used. This Court has examined the measure of damages involving injury to property in our early jurisprudence. Additionally, the broad purpose of the uninsured motorist statute informs the proper meaning of the phrase. Our independent interpretation of the phrase is confirmed by subsequent legislative action amending the statutory language of IN § 19-509. 1.

The Ordinary and Popular Understanding of “Damage” and “Property.” As a starting point, we first consider the dictionary definitions of the words “damage” and “property” to derive their common understanding as those words are used in the English language.9 This is an essential starting point because the “ordinary, popular understanding of the English language dictates interpretation of [the statute’s] 9 See Couret-Rios v. Fire & Police Emps’. Ret. Sys. of Balt., 468 Md. 508 , 530 n.8 (2020) (“To determine the ordinary meaning of those words, we find it helpful to consult their dictionary definitions.” (quoting Neal, 467 Md. at 417 n.10)); see also Marriott Emps. Fed. Credit Union v. Motor Vehicle Admin., 346 Md. 437, 447 (1997) (“Although dictionary definitions do not provide dispositive resolutions of the meaning of statutory terms, dictionaries do provide a useful starting point for determining what statutory terms mean, at least in the abstract, by suggesting what the legislature could have meant by using particular terms.” (internal citations and original alteration omitted)). 14 terminology.” Johnson, 467 Md. at 372 (quoting Blackstone, 461 Md. at 113 ).

Here, as to whether the phrase “damage to property” contemplates loss of use damages, the definitions of “damage” and “property” are telling. The word “damage” is defined in similar ways in both legal and non-legal sources. Black’s Law Dictionary defines “damage” in part as “[l]oss or injury to person or property.” Black’s Law Dictionary 488 (11th ed. 2019); see also Damage, Garner’s Dictionary of Legal Usage 242 (3d ed. 2011) (defining the term as “[l]oss, injury or deterioration”). Merriam-Webster defines the term as “loss or harm resulting from injury to person [or] property.” Damage, Merriam-Webster, https://www.merriam- webster.com/dictionary/damage (last visited on July 21, 2020), archived at https://perma.cc/5NK3-DMSV.

What plainly appears across these definitions is that a “loss” is customarily associated with damage. The legal and non-legal definitions of “property” also accord with each other. Black’s Law Dictionary defines “property” in part as “the rights in a valued resource such as . . . chattel[; or a]ny external thing over which the rights of possession, use, and enjoyment are exercised.” Black’s Law Dictionary 1470 (11th ed. 2019).10 Merriam- Webster likewise provides the following pertinent definitions: “something owned or 10 Garner’s Dictionary of Legal Usage mirrors this definition: The traditional legal meaning of the term is “a right over a determinate thing, either a tract of land or a chattel.” The transferred sense that nonlawyers commonly attach to the term is “any external thing over which the rights of possession, use, and enjoyment are exercised.” Property, Garner’s Dictionary of Legal Usage 721 (3d ed. 2011). 15 possessed[;] the exclusive right to possess, enjoy and dispose of a thing[; or] something to which a person . . . has a legal title.” Property, Merriam-Webster, https://www.merriam- webster.com/dictionary/property (last visited on July 21, 2020), archived at https://perma.cc/JT6J-AVZ6. These definitions confirm the uncontroversial notion that, as relevant here, “property” is a thing that an individual may use as he or she sees fit.

From these sources, we glean that the term “damage” necessarily means a loss of something. Simply put, to equate “damage” with its ordinary understanding—a loss of some sort—is not an imaginative leap; such an interpretation naturally flows from the word’s definitions. The remaining question, then, is loss of what? Fortunately, that portion of the equation is exceedingly straightforward: a loss of property.

Inherent in the concept of property is the right to enjoy, possess and use the object. Fundamentally then, the essence of the term “damage to property” means that the lawful owner is deprived of the ability to apply the object in a manner that he or she desires—i.e., a loss of use. We find these definitions enlightening; however, “[w]ords can have multiple meanings and often do. And the numerous meanings of a particular word may each satisfy the ordinary and popular understanding of that word.

In order to interpret a word’s specific meaning in a particular statute we look to the context in which the word is used.” Chow v. State, 393 Md. 431, 448 (2006). With this foundation, we turn to early cases in which this Court articulated the types of damages encompassed by the concept of damage to property: 16 Washington, Baltimore & Annapolis Electric Railway Co. v. William A. Fingles, Inc., 135 Md. 574 (1920)