Butler v. Liberty Mutual Insurance

⁶⁸⁵ Melvin, J., delivered the opinion of the Court. This action was brought under the Maryland version of the Uniform Declaratory Judgments Act, Md. Code (1974) §§ 3-401 to 415, Courts and Judicial Proceedings Article. The plaintiff-appellant, Louis A. Butler, filed his “Declaration for Declaratory Judgment” on 4 March 1976 in the Circuit Court for Prince George’s County against the appellees, Liberty Mutual Insurance Company (Liberty Mutual) and Travelers Insurance Company (Travelers) for the stated purpose of “obtaining] a declaratory judgment . . . with regard to the issue of coverage under a certain policy of insurance issued by [Liberty Mutual] to . . . E.T.&T. Leasing, Inc., or alternatively, under the Uninsured Motorist endorsement of a policy of insurance . . . issued by [Travelers] to plaintiff, both of which policies were in full force and effect on April 27, 1975”.

E.T.&T. Leasing, Inc. was also joined as a defendant in the declaratory proceedings along with Frank Anthony Dangelo, Jr. and James M. Cook. The declaration, filed at law, alleged that on 27 April 1975 appellant Butler sustained personal injuries while he was a passenger in a vehicle operated by Dangelo in the State of Florida; that the vehicle was owned by E.T.&T. Leasing, Inc. and had been leased to Dangelo and Cook and was being operated “with the permission of said owner”. The declaration concluded as follows: “3. There is presently pending in the Circuit Court for Prince George’s County, Maryland, an action at law known as LOUIS A. BUTLER versus FRANK ANTHONY DANGELO, JR., et al, being Law No. 60,884, involving said accident, in which plaintiff herein is plaintiff therein. 4.

Plaintiff claims that the policy of insurance issued by defendant LIBERTY MUTUAL INSURANCE COMPANY, mentioned hereinabove, was in full force and effect at the time of said accident of April 27,1975, and that coverage should be afforded to defendants FRANK ANTHONY DANGELO, JR., JAMES M. COOK, and E.T.&T. ⁶⁸⁶ LEASING, INC., by said defendant insurance carrier for any liability arising from said accident, but said defendant insurance carrier declines to acknowledge that coverage is afforded to said defendants by it for said accident, for reasons not made known to plaintiff. 5. If coverage is not afforded by defendant LIBERTY MUTUAL INSURANCE COMPANY for the said accident of April 27, 1975, then plaintiff would be entitled to coverage under the Uninsured Motorists endorsement contained in his said policy with defendant TRAVELERS INSURANCE COMPANY. 6. Plaintiff is uncertain as to his rights, status, and other legal relationships arising from the failure of defendant LIBERTY MUTUAL INSURANCE COMPANY to declare the applicability of its coverage to defendants FRANK ANTHONY DANGELO, JR., JAMES M. COOK, and E.T.&T. LEASING, INC., for the said accident of April 27, 1975, and plaintiff should not be required to go through the expense of litigating the said Law No. 60,884, with the uncertainty as to whether he should have applied in the first place for coverage under his Uninsured Motorists endorsement with defendant TRAVELERS INSURANCE COMPANY. WHEREFORE, plaintiff respectfully prays this Court by declaratory judgment to declare: 1.

That coverage be afforded to defendants FRANK ANTHONY DANGELO, JR., JAMES M. COOK, and E.T.&T. LEASING, INC., jointly and severally, under the policy of insurance issued by defendant LIBERTY MUTUAL INSURANCE COMPANY to defendant E.T.&T. LEASING, INC., for any liability which may be incurred by said defendants, jointly or severally, for the personal injuries and/or property damage suffered by ⁶⁸⁷ plaintiff arising out of aforesaid accident of April 27,1975; 2. Or, alternatively, that defendant TRAVELERS INSURANCE COMPANY under its Uninsured Motorist endorsement of the said policy of insurance issued to plaintiff LOUIS A. BUTLER shall afford coverage for any personal injuries and/or property damage suffered by plaintiff arising out of the aforesaid accident of April 27, 1975. 3. That plaintiff is entitled to a reasonable attorneys’ fee for the prosecution of the above-entitled cause; 4. That plaintiff may have such other and further relief as the nature of this cause may require.” All defendants were duly served with process on 1 April 1976.

Liberty Mutual responded by filing a Motion Raising Preliminary Objection, moving that the declaration be dismissed, for the following reasons: “1. This Court does not have jurisdiction over the subject matter of the Declaration for Declaratory Judgment, for reason that said Declaration does not set forth the existence of a justiciable! controversy. 2. The plaintiff lacks legal capacity to maintain said Declaration, and does not have standing to maintain the action, for reason that plaintiff is not a person ‘interested’, within the meaning of § 3-406 of the Courts and Judicial Proceedings Article of the Annotated Code of Maryland, in whatever issues of coverage may now exist under a certain policy of insurance issued by Liberty Mutual Insurance Company to E.T.&T. Leasing, Inc. 3. For such further reasons as are contained in the Memorandum of Points and Authorities, attached hereto and made a part hereof, or as may be advanced at the hearing on this Motion.” ⁶⁸⁸ On 7 April 1976, appellant filed “Points and Authorities in Opposition to Motion Raising Preliminary Objection” in which he perceived the issue to be: “Must plaintiff pursue his tort action (Law No. 60,884) to conclusion, with concomitant expenses and time loss, only to possibly learn at the conclusion thereof that he must begin all over again against his personal insurance carrier, TRAVELERS INSURANCE COMPANY, under his uninsured motorists coverage, if LIBERTY MUTUAL INSURANCE COMPANY disclaims coverage at the conclusion of the tort action?” On 5 May 1976, a hearing was held on Liberty Mutual’s motion.

At the outset of the hearing, counsel for Liberty Mutual told the court that Traveler’s counsel “asked me to present to the Court a line entering the appearance of his [Travelers’ counsel] law firm on behalf of Travelers, and he asked me to apprise the Court they take a neutral position in this motion”. The hearing proceeded. No testimony or other evidence was offered. After hearing arguments from counsel for appellant and Liberty Mutual, the court took the matter under advisement.

On 21 May 1976, appellant’s counsel filed in the proceedings an “Affidavit in Support of Opposition To Motion Raising Preliminary Objection” stating that “he has made a demand for arbitration upon defendant [Travelers], pursuant to the policy of insurance between [appellant and Travelers]”. Attached to the affidavit was a copy of a letter from a “Tribunals Supervisor” , of the American Arbitration Association in Washington, D. C., indicating that such a demand “was filed with this office on May 18, 1976”. On 25 May 1976, Travelers filed its own Motion Raising Preliminary Objection moving that the action be dismissed on the same grounds set forth in Liberty Mutual’s motion. By accompanying letter to the Clerk, counsel for Travelers stated that “[t]he issue raised in this Motion is presently under consideration by Judge Couch and, because of this, we hereby expressly waive any further Hearing on this ⁶⁸⁹ Motion and ask that it be submitted to Judge Couch, for consideration along with the previously filed Motion of Liberty Mutual”.

Up to that time, Travelers had filed no other responsive pleading to the declaration. Travelers’ counsel, however, had by letter to Judge Couch, dated 14 May 1976, with copies to counsel for appellant and Liberty Mutual, “statefd] the position” of Travelers “in the above matter”. In the letter, counsel stated, inter alia: “With regard to plaintiffs claim that he has standing to sue The Travelers Insurance Company, this claim falls because of the fact that there is no dispute between Travelers and its insured, Butler. We acknowledge that we afford uninsured motorist coverage to Mr. Butler and have never suggested otherwise.” On 2 June 1976, by a “Memorandum of the Court”, filed in the proceedings, Judge Couch granted Liberty Mutual’s motion to dismiss, and on 7 June 1976 granted Travelers’ similar motion.

The reason for his ruling as to both motions was stated by the judge in his memorandum: “The Court finds that a declaratory decree should not be given unless ‘there is either an actual existing controversy, or antagonistic claims which indicate inevitable litigation or when a party asserts a legal status or right and there is a denial by an adversary party, and the court is satisfied that such a decree will serve to terminate the controversy’. Eberts v. Congress’l Country Club, supra 197 Md. at 465. (see Hamilton v. McAuliffe, [ 277 Md. 336 (1976)]). “The Court does not feel that the above cited requirements are present in this case and accordingly the Motion is granted.” ⁶⁹⁰ No judgment was entered at that time in favor of either Liberty Mutual or Travelers. Three weeks later, on 28 June 1976, the appellant filed a “Motion to Vacate and To Reconsider”.

The motion asked that the orders of 2 June and 7 June be vacated and reconsidered, “for the reason that since that time [TRAVELERS] has advised plaintiff that it would presently refuse to pay any award made to plaintiff, its insured under its uninsured motorist endorsement, because of the uncertainty as to the insured status of the operator of the vehicle in which plaintiff was a passenger, such uncertainty arising from the position taken by defendant [LIBERTY] in failing to either confirm or deny coverage for subject occurrence, as will appear more fully by reference to the letters to undersigned counsel dated June 14, 1976, and June 25, 1976, from the attorney for [TRAVELERS] in the arbitration matter, copies of which are attached hereto and made a part hereof. Further, undersigned counsel is