Connors v. Government Employees Insurance

WOODWARD, J. Appellants, Linda Connors, individually and as personal representative of the Estate of Robert Connors, appeal from an Order of the Circuit Court for Montgomery County granting summary judgment in favor of appellee, Government Employees Insurance Company (“GEICO”). 1 Appellants present one question for our review: Do the underinsured motorist provisions of GEICO’s insurance contract provide the Appellant, Linda Connors Individually and Linda Connors as personal representative of the Estate of Robert Connors, a limit of underinsured coverage of $800,000 each, subject to an aggregate payment to all Appellant’s claims by GEICO not to exceed $300,000? Finding no error, we shall affirm the judgment of the circuit court. BACKGROUND Linda and Robert Connors, husband and wife, were injured on April 14, 2009, while walking on Captain Dement Drive in Waldorf, Maryland. A vehicle driven by Adam Pond, pulled out of a driveway at 3269 Captain Dement Drive, striking Mr. and Mrs. Connors and knocking them to the ground.

Mrs. Connors suffered minor physical injuries and significant emotional trauma, while Mr. Connors was injured severely, and he died on January 31, 2011. Mr. and Mrs. Connors were both “insureds” under a motor vehicle policy issued by GEICO which provided uninsured motorist coverage (“UIM”) with ⁴²² policy limits of $300,000 per person/$300,000 per occurrence. The tortfeasor, Adam Pond, maintained automobile liability insurance through Allstate Insurance Company with liability limits of $100,000 per person/$300,000 per occurrence. With GEICO’s consent, Mr. and Mrs. Connors accepted “per person” policy limits from Allstate, receiving $100,000 each, thereby exhausting the limits of the Allstate policy.

The Connorses submitted claims to GEICO pursuant to the UIM provisions of GEICO’s Maryland Family Automobile Policy issued to Mr. Connors. GEICO asserted that, after crediting the policy for $200,000, which appellants received from Allstate, only $100,000 of UIM benefits remained. The Connorses disagreed with GEICO’s calculation, contending that the “per person” limit of the policy should apply, leaving $300,000 in UIM benefits remaining. The Connorses filed a claim with the Maryland Insurance Administration, pursuant to Maryland Code (1996, 2006 Repl.

Vol., 2008 Cum.Supp.), § 27-1001 of the Insurance Article II (“I.A. II”), 2 alleging that GEICO had failed to act in good faith in settling their claim. On July 22, 2010, the Maryland Insurance Administration issued a decision, finding that GEI-CO did not breach its obligation to act in good faith, and agreeing with GEICO that $100,000 of UIM coverage remained. GEICO subsequently tendered the Connorses the $100,000 it asserts is available according to the terms of the UIM policy, under an agreement that allows appellants to pursue their contention that $300,000 in benefits remain (inclusive of the $100,000 paid). On December 16, 2010, Mr. and Mrs. Connors filed a lawsuit against GEICO, seeking declaratory relief in the Circuit Court for Montgomery County.

After considering cross-motions for summary judgment, the circuit court granted summary judgment in favor of GEICO. The circuit court, in relevant part, stated as follows: ⁴²³ 2. The GEICO Policy is not ambiguous. GEICO is obligated under GEICO Policy No. 0377-86-55-06 to make $100,000 in UIM benefits available to satisfy the claims of [appellants]. 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 [appellants] that exhausted the tortfeasor’s liability limits, which in this instance was $200,000. GEICO’s remaining UIM obligation to [appellants] is to fill the “gap” between what [appellants] could have recovered from the tortfeasor had the tortfeasor maintained identical liability coverage to the coverage [appellants] purchased under the GEICO Policy. That “gap” is $100,000 which, as noted, has been paid. Appellants noted this timely appeal.

DISCUSSION When we review the decision of a circuit court granting summary judgment, we review that decision de novo. Powell v. Breslin, 195 Md.App. 340, 345 , 6 A.3d 360 (2010), aff'd, 421 Md. 266 , 26 A.3d 878 (2011). A trial court, when deciding a motion for summary judgment, may grant summary judgment if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor the judgment is entered is entitled to judgment as a matter of law. Id. at 345-46 , 6 A.3d 360 .

Where there is no dispute of material fact, our review focuses on whether the trial court’s grant of the motion was legally correct. Id. at 346 , 6 A.3d 360 . Appellants contend that the circuit court erred in interpreting the language of the GEICO insurance policy’s UIM provisions. They argue that the plain language of the insurance contract allows for both Mrs. Connors and the estate of Mr. Connors to collect $300,000 pursuant to the policy’s “per person” limits.

Specifically, appellants contend that the policy’s “subject to” language in subsection (2) of the “Limits of Liability” portion of Section IV support the “per accident” ⁴²⁴ limit as being subservient to the “per person” limit. Appellants assert that the UIM policy provides $800,000 “per person” worth of coverage irrespective of the limiting language $300,000 “per occurrence.” Because there were claims filed on behalf of two individuals, Mr. Connors and Mrs. Connors, appellants contend the UIM benefits calculation should start with a total of $600,000 in UIM coverage. Appellants agree that GEICO should receive credit for the $200,000 from Allstate’s liability policy, but argue that this amount should be applied to the $600,000 figure, leaving $400,000. Finally, appellants conclude their calculation by using the $300,000 “per accident” limit as a “cap” on the $400,000 aggregate amount, thus entitling them to a total recovery from GEICO of $300,000.

GEICO responds that the language of the UIM policy is clear and unambiguous, mandating that $100,000 of UIM benefits remain available to appellants. GEICO asserts that the insurance contract states clearly that the “per occurrence” limit applies to claims of two or more people, and is to be reduced by all amounts paid by the tortfeasor, in aggregate. GEICO also argues that appellants’ interpretation of the “subject to” language is flawed, because, when read properly, it functions to restrict an individual insured from collecting more than the “per occurrence” policy limit. GEICO further contends that, in order to interpret the insurance policy accurately, the contract must be read in context with Maryland’s UIM statutory scheme and relevant case law.

According to GEICO, appellants’ conscious decision to purchase $300,000 in UIM coverage, viewed in accord with Maryland’s UIM statute, represents “the amount that would place [appellants in the same position [as] if the tortfeasor had carried identical liability coverage.” GEICO also contends that Maryland case law supports the “per occurrence” limit as the “appropriate starting point” for a UIM “gap” calculation. GEICO concludes that the circuit court was correct in finding that $100,000 of UIM benefits remain under the provisions of the insurance policy and in granting summary judgment in its favor. ⁴²⁵ I. UIM coverage “plays a leading role in Maryland’s comprehensive motor vehicle insurance scheme by assuring compensation for victims of noninsured or inadequately insured motorists.” Andrew Janquitto, Maryland Motor Vehicle Insurance § 8.1, at 308 (3d ed.2011). Multiple amendments to the Maryland UIM statute evidence the increasing importance of UIM insurance within insurance law. UIM coverage first found its way into Maryland law in 1972. 1972 Md. Laws, Chap. 73, § 1; see also Janquitto, supra, § 8.1, at 308.

In 1975, the UIM statute was amended to require every motor vehicle insurance policy issued in Maryland to contain minimum uninsured motorist coverage. 1975 Md. Laws, Chap. 562, § 1; see also Waters v. U.S. Fid. & Guar. Co., 328 Md. 700, 710 , 616 A.2d 884 (1992). In 1981, the UIM scheme was again amended to allow insureds the opportunity to contract for more than a minimum amount of UIM coverage. 1981 Md. Laws, Chap. 510; see also Waters, 328 Md. at 711 , 616 A.2d 884 (noting that by Chapter 510 of the 1981 Acts, the “General Assembly ... required that insurers shall [make] available to the insured the opportunity to contract for higher amounts” (second alteration in original) (internal quotation marks omitted)). Uninsured, and underinsured, 3 motorist insurance is applicable when the limit of the tortfeasor’s liability insurance policy is less than an insured’s UIM coverage.

Waters, 328 Md. at 711-12 , 616 A.2d 884 . Maryland Code (1977, 2009 Repl. Vol.), § 17-103 of the Transportation Article II mandates that in Maryland, each motor vehicle liability policy contain a minimum of $20,000 coverage for injury or death of any one person in an accident, $40,000 in coverage for injury ⁴²⁶ or death of two or more people in an accident, 4 and a minimum of $15,000 in coverage for property damage resulting from any one accident. See also I.A. II § 19-509(e) (requiring that UIM coverage equal at least the amount required by Title 17 of the Transportation Article).

The underlying purpose of Maryland’s UIM scheme is 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 884 . The statute permits insureds to contract for higher amounts than those provided under Title 17 of the Transportation Article provided these amounts do not exceed the amounts of the motor vehicle liability coverage provided by the policy. I.A. II § 19-509(e); Hoffman v. United Servs. Auto.

Ass’n, 309 Md. 167, 178 , 522 A.2d 1320 (1987). We interpret the language of an insurance policy in accord with the same principles applicable to the construction of other contracts. Mitchell v. AARP Life Ins. Program, N.Y. Life Ins.

Co., 140 Md.App. 102, 116 , 779 A.2d 1061 (2001). Like any other contract, an insurance contract is “measured by its terms unless a statute, a regulation, or public policy is violated thereby.” Pac. Indem. Co. v. Interstate Fire & Cas.

Co., 302 Md. 383, 388 , 488 A.2d 486 (1985). The words of an insurance contract are given their customary, ordinary, and accepted meaning. Beale v. Am. Nat’l Lawyers Ins.

Reciprocal, 379 Md. 643, 660 , 843 A.2d 78 (2004). The ordinary meaning of a word is determined by what a reasonably prudent lay person would attach to it. Id. When a court finds that the contractual language is plain and unambiguous, the court will enforce the terms as a matter of law.

Pac. Indem. Co., 302 Md. at 389 , 488 A.2d 486 . If the language of an insurance contract is ambiguous, however, the court may turn to extrinsic evidence to determine the intent of the parties.

Clendenin Bros. v. U.S. Fire Ins. Co., 390 Md. 449, 459 , 889 ⁴²⁷ A.2d 387 (2006). Maryland does not follow the rule that some of our sister states apply that an insurance policy should, as a matter of course, be construed against the insurer. Megonnell v. U.S. Auto.

Ass’n, 368 Md. 633, 655 , 796 A.2d 758 (2002). If ambiguous, however, an insurance policy “ “will be construed liberally in favor of the insured and against the insurer as drafter of the instrument.’ ” Id. at 655-56 , 796 A.2d 758 (emphasis omitted) (quoting Dutta v. State Farm Ins. Co., 363 Md. 540, 556 , 769 A.2d 948 (2001)). The pertinent provisions of the GEICO policy are set forth below: “SECTION IV—UNINSURED MOTORISTS COVERAGE 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” is the limit of our liability for all damages, including those for care or loss of services, 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, due to bodily injury sustained by two or more persons as the result of one accident. 4..... The amount payable under this coverage will be reduced by all amounts: ⁴²⁸ (a) Paid by or for all persons or organizations liable for the injury....” (Emphasis added) (bold italics in original). Appellants contend that the appropriate benefits calculation begins with subsection (1), which mandates a $300,000 limit for “each person” resulting from “one accident.” Appellants argue 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).

Appellants’ reading of the insurance contract would allow an additional recovery of up to $200,000 for Mrs. Connors individually and an additional recovery of up to $200,000 for the estate of Mr. Connors. Appellants further argue that failing to give meaning to the “subject to” language of subsection (2) would allow GEICO to “avoid paying benefits it otherwise agreed to pay.” To provide additional clarity, appellants argue that the UIM benefits should be calculated as follows: Estate of Mr. Connors: GEICO UIM Coverage $300,000 per person Payment from Tortfeasor ($100,000 per person) GEICO Coverage Remaining $200,000 per person Mrs. Connors: GEICO UIM Coverage $300,000 per person Payment from Tortfeasor ($100,000 per person) GEICO Coverage Remaining $200,000 per person Appellants conclude that by utilizing the per accident limitation of $300,000 as a cap on the above-calculated $400,000 aggregate amount, they are ultimately entitled to $300,000 in remaining UIM benefits. GEICO counters that “subsection (2) is the starting point, not subsection (1), because the claims involve injuries ‘sustained by two or more persons as the result of one accident.’ ” GEICO argues that using subsection (2) as a starting point, the per accident limit of $300,000 is reduced by the $200,000 received from the tortfeasor, leaving $100,000 in UIM benefits available to appellants. GEICO contends that the “subject to” language of subsection (2), when read properly, further limits ⁴²⁹ liability pertaining to one accident involving one person.

To provide additional clarity, GEICO argues that the UIM benefits should be calculated as follows: Estate of Mr. Connors and Mrs. Connors Individually: GEICO UIM Coverage $300,000 per accident Payment from Tortfeasor ($200,000 in aggregate) GEICO Coverage Remaining $100,000 per accident We agree with GEICO. The plain language of subsections (1) and (2) of GEICO’s insurance policy, indicates the correct starting point for calculations of UIM benefits and the corresponding coverage limitation. The decisive factor, in our view, is the number of injured insureds claiming under the policy. Subsection (1) clearly states that it is applicable to “bodily injury sustained by one person as the result of one accident.” It follows logically that, if one insured is injured as the result of one accident, subsection (1) limits the liability of the insurer to the coverage limits pertaining to “each person.” For example, if Mrs. Connors was the only person injured in the accident, subsection (1) would be the appropriate starting point for the UIM benefits calculation, limiting GEICO’s liability to the policy’s “each person” limit of $300,000.

Conversely, the unambiguous language of subsection (2) makes it applicable to “bodily injury sustained by two or more persons as the result of one accident.” Therefore, if two or more insureds are injured as the result of one accident, subsection (2) will apply to limit the liability of the insurer to the coverage limits relating to “each accident.” When subsection (2) is the starting point for a claim, the “subject to” qualifying clause functions to further limit the liability of the insurer. Subsection (2) sets the “each accident” limitation for an injury involving two or more insureds, which is then further restricted by the “each person” limit of subsection (1). The qualifying clause does not subvert or modify the hierarchy of the subsections, as appellant contends, but rather acts to incorporate the limiting language of subsection (1) into subsection (2), providing a further restriction on liability. The result is two layers of limitation—subsection (2) initially limits liabili ⁴³⁰ ty to the “each accident” amount, and then liability is further limited by the “each person” amount.

For example, the instant case involves two injured insureds, Mr. and Mrs. Connors, who asserted UIM claims arising from a single accident. Because two insureds were injured, the correct starting point for a UIM calculation is subsection (2), which mandates GEICO’s liability is the “each accident” limit of $800,000. The “subject to” qualifying clause, as described previously, incorporates the “each person” limit of subsection (1) into subsection (2), further limiting GEICO’s “each accident” liability. Because the “each person” limit in GEICO’s policy is $300,000, subsection (1) does not provide any further limit on GEICO’s liability.

Thus the “each accident” limit of $300,000 applies. Appellants’ contention that the “per accident” limitation of subsection (2) is “subject to” the “per person” limitation of subsection (1) arises out of their reading the contract provisions chronologically in the order of subsection (1) followed by subsection (2). Although appropriate with some contracts, this is not the