Bock v. Insurance Commissioner

ALPERT, Judge. We are called upon to decide whether the mailing of a protest against the non-renewal of an automobile insurance policy will satisfy the requirement that the protest be “filed” with the Insurance Commissioner. Charles E. Bock, appellant, appeals from a judgment by the Circuit Court for Baltimore City, the Hon. Robert I.H. Hammerman presiding, in which the court affirmed the Maryland Insurance Commissioner’s decision to deny Bock’s request for a hearing on the nonrenewal of his automobile insurance policy.

We reverse for the reasons set forth below. FACTS On September 14, 1988, Nationwide Insurance Company (Nationwide) sent to Charles and Janice Bock a notice that the company would not renew their automobile policy and that the current policy would end effective 12:01 a.m. on November 6, 1988. The “right of protest” incorporated into the notice instructed the Bocks that they could protest the proposed nonrenewal if they signed two copies of the notice and sent them to the Insurance Commissioner (the Commissioner) within 30 days after their receipt of the notice. The notice further indicated that the Commissioner could not consider the protest unless the Bocks filed it within the 30 day time limit.

It also informed the Bocks of their right to request a hearing if the Commissioner concluded that their protest was without merit. The Bocks again had 30 days from the receipt of the Commissioner’s determination to request a hearing. On September 19, 1988, Bock allegedly signed two (2) copies of the nonrenewal notice and sent them via regular mail to the Commissioner at 501 St. Paul Place, Baltimore, Maryland 21202, as per Nationwide’s instructions in the ⁷²⁶ nonrenewal notice. Neither Nationwide nor the Commissioner ever corresponded with Bock because the Commissioner allegedly never received the protest that Bock claims he sent.

On November 8, 1988, Bock was involved in an at-fault accident with his automobile. Bock called the company that day to report the accident and the company informed him that it had cancelled his policy on November 6, 1988. Bock immediately called the Commissioner, who advised Bock that there was no record that he had filed a protest. After a series of discussions between Bock and the Commissioner, Bock sent a certified letter to the Commissioner and to Nationwide.

In the letter, Bock explained that he had mailed his protest on September 19, 1988, and had assumed that Nationwide would continue his coverage until the Commissioner reached a decision on the protest. On December 14, 1988, an insurance investigator, Waldemar Bradshaw, wrote to Bock explaining that the Insurance Division could not act on the protest because the Commissioner had not received it within the 30 days after Bock’s receipt of the nonrenewal notice. On April 11, 1989, Bock’s attorney wrote a letter to the insurance investigator outlining the sequence of events that had occurred. On April 26,1989, the insurance investigator informed Nationwide that Bock had filed a protest and that the protest had stayed the nonrenewal action.

On May 16, 1989, however, a staff specialist, John V. Quinn, retracted the stay that the insurance investigator issued in his letter of April 26. The staff specialist explained that the investigator mistakenly believed that Bock’s policy still was in effect when the investigator issued the stay. The staff specialist noted that under section 240AA(c)[sic], 1 “[a] protest duly filed shall stay the proposed action of the insurer pending a final determination.” Because the Commissioner had not received Bock’s protest within the 30 day time limit, ⁷²⁷ there was no protest “duly filed.” Thus, the Commissioner had no authority to act on the matter or to hold in effect a terminated policy. The staff specialist did suggest that if Bock could show that he timely mailed the protest, the Insurance Division would pursue the matter with Nationwide; the staff specialist further indicated that he had asked Nationwide to respond to Bock’s letter of April 11, 1989 and that he would inform Bock of the results.

The Commissioner never reported to Bock any response by Nationwide. On June 1, 1989, Bock’s attorney formally requested a hearing pursuant to section 240AA(f) of article 48A of the Maryland Annotated Code. The staff specialist responded on June 23, 1989, again stating that the Commissioner was unable to grant or deny a hearing pursuant to the statute because the Commissioner has no authority over a protest unless it is duly filed. The staff specialist reiterated that if Bock could substantiate that he mailed the protest, the Insurance Division would pursue the matter with Nationwide.

Bock appealed from the Commissioner’s decision as reflected in his letter of June 23, 1989 to the Circuit Court for Baltimore City. The lower court affirmed the Commissioner’s decision for two reasons. The court first found that “the state of [the] law is that the protest must be filed with the Commissioner within a prescribed period of time and received by them physically.” Although the court accepted Bock’s proffer that he mailed the protest, the court went on to conclude that “the clear evidence ... is that the protest was never received.[ ] I think this rebuts the presumption that there might be delivery of the mail indicated. It is for this reason that I affirm the [Commissioner’s] decision.” Bock appeals to us from the lower court’s decision.

ISSUE Bock asks us to decide whether the lower court erred by affirming the Commissioner’s decision to refuse a hearing when there was an unrebutted presumption from the evi ⁷²⁸ dence that Bock had satisfied the requirements of Md.Ann. Code, art. 48A, § 240AA(d) and (e), which would have stayed Nationwide's nonrenewal of the policy. THE CONFLICT The focal point of the dispute between Bock and the Commissioner lies in the language of section 240AA(d) and (e) of article 48A of the Maryland Annotated Code (1986). The two subsections read as follows: (d) Protest. — An insured shall have the right to protest the proposed action of the insurer by signing 2 copies of the notice and sending them to the Commissioner within 30 days after receipt 2 of the notice. The Commissioner shall, upon receipt of a protest, notify the insurer of the filing of the protest, (emphasis added).

(e) Stay of Proposed Action. — A protest duly filed shall stay the proposed action of the insurer pending a final determination by the Commissioner, and the insurer shall maintain in force the same coverage and premium in effect on the day the notice of proposed change was sent until the final determination is made, provided that any lawful premium due or becoming due prior to the determination is made, (emphasis added). Based on this language, we believe that the legislature ideally intended section 240AA(d) and (e) to operate as follows. Subsection (d) gives the insured the right to contest the insurer’s proposed course of action — either cancellation or renewal — so long as the insured signs 2 copies of the notice (the protest) and sends (mails) them to the Commissioner within 30 days after the date of mailing of the notice. Note that under the language of subsection (d), the insured need only send the protest within the 30 day time period, i.e., a protest postmarked within that time should meet the statu ⁷²⁹ tory requirement.

The subsection assumes that the Commissioner eventually will receive the protest. Upon receipt of the protest, the Commissioner must notify the insurer “of the filing.” Subsection (e) then provides that the insured’s “duly filed” protest, i.e., a protest which the Commissioner has received, will automatically stay the insurer’s proposed course of action. Consequently, the insurer must maintain the same coverage and premium that were in effect when the insurer sent the notice until the Commissioner reaches a final determination. The insured must pay any premium due or that becomes due before the Commissioner has resolved the matter.

In his argument, Bock points to subsection (d) as being dispositive of the issue. Bock submits that the right to protest arises when the insured signs 2 copies of the nonrenewal notice and sends them to the Commissioner within the 30 day time period. He contends that once he properly sent (mailed) the protest, i.e., he put the protest into an envelope, sealed it, placed a stamp on it, addressed it to the Commissioner’s correct address, and placed it in a U.S. mailbox, a presumption arose that the protest reached the Commissioner within the regular time for delivery. If unrebutted, Bock argues that the presumption of receipt should be enough to give the Commissioner the authority to act on Bock’s behalf and to trigger the automatic stay provision of subsection (e).

The Commissioner, on the other hand, believes that subsection (e) controls the disposition of the issue. The Commissioner interprets “duly filed” to mean that the insured must not only sign two copies of the notice and send them to the Commissioner within the 30 day time period, but also that the Commissioner must physically receive the protest before the Commissioner has the authority to take any action on the insured’s behalf and before it can trigger the automatic stay provision. ⁷³⁰ DEFINITIONS Black’s Law Dictionary states that “send” means to deposit in the mail ... with postage ... provided for and properly addressed and in the case of an instrument to an address specified thereon____” BLACK’S LAW DICTIONARY 1221-22 (5th ed. 1979). It defines “mailed” as when a letter is “properly addressed, stamped with the proper postage, and deposited in a proper place for receipt of mail,” id. at 858, so “send” and “mail” have the same meaning. The case law supports Bock’s contention that “the testimony of a witness that he properly addressed, stamped and mailed a letter raises a presumption that it reached its destination at the regular time and was received by the person to whom it was addressed.” Kolker v. Biggs, 203 Md. 137, 144 , 99 A.2d 743 (1953).

Black’s Law Dictionary also defines “file: [a] paper is said to be filed when it is delivered to the proper officer and received by him to be kept on file____” BLACK’S LAW DICTIONARY 566 (5th ed. 1979). The Court of Appeals applied that definition in Levy v. Glens Falls Indemnity Co., 210 Md. 265, 273 , 123 A.2d 348 (1956) (“a paper is said to be ‘filed’ when it is delivered to the proper officer and received by him to be kept on file”). See also American Casualty Co. v. Dep’t of Licensing and Regulation Insurance Division, 52 Md.App. 157, 162 , 447 A.2d 484 (1982). The court also recognized the distinction between “mailing” and “filing” in Renehan v. Public Serv.

Comm’n, 231 Md. 59, 63 , 188 A.2d 566 (1963), when it stated that “[t]he mailing of the appeal to the Clerk is not made the equivalent of filing it with him.” Thus, the Commissioner is correct in the definition and the application of the term “file.” It is impossible to discern from the language of the statute alone whether the legislature intended “mailing” or “filing” to control in a situation such as this one; in fact, it is likely that the legislature never anticipated such a situation. The language of these two subsections, by itself, will not resolve the issue. ⁷³¹ LEGISLATIVE INTENT We must look for direction to the legislature’s intent in enacting section 240AA. In ascertaining and effectuating the legislative intent, the statute’s legislative history, administrative interpretations, purpose, and its language taken in context and in relation to all its provisions must be considered. If the words used in the statute are of doubtful meaning, the court in determining the legislative intent will not only consider their usual and literal meaning, “but their meaning and effect considered in the light of the objectives and purposes of the enactment and the consequences resulting from one meaning rather than another meaning____” Statutes should be construed reasonably and with reference to the purposes to be accomplished.

Statutory construction which leads to results that are unreasonable, illogical or inconsistent with common sense is to be avoided. Woodmont Country Club v. Montgomery Co., 61 Md.App. 229, 236 , 486 A.2d 218 (1985) (citations omitted). The Court of Appeals and the Maryland Attorney General previously have examined the history and purpose of section 240AA. 3 In Gov’t Employees Ins. Co. v. Insurance Commissioner, 273 Md. 467, 480 , 330 A.2d 653 (1975), the Court of Appeals noted that the legislature enacted section 240AA as part of “a sweeping overhaul of the [State’s] automobile liability insurance laws____” The Court explained that section 240AA provides the insured with procedural protections that complement the substantive limitations which section 234A imposes on an insurer in the event that the insurer decides to cancel or refuses to renew an insured’s automobile policy.

Id. at 483 , 330 A.2d