Edwards v. Mayor of Baltimore

WOODWARD, J. This appeal arises from a declaratory judgment of the Circuit Court for Baltimore County that appellee, the Mayor and City Council of Baltimore (“the City”), is not required to defend or indemnify appellant, Calvin B. Edwards, Jr., in relation to a motor vehicle accident that occurred on April 8, 2002, while appellant was operating a City-owned vehicle. Appellant sought relief from the City in the circuit court based on an earlier judgment for monetary damages entered against him in the District Court for Baltimore County, wherein the district court found that appellant was negligent in the operation of the City-owned vehicle at the time of the accident. On appeal, appellant presents four questions 1 2 for our review, which we have distilled into a single question: ⁴⁵¹ Did the circuit court err in failing to declare that the City, as the self-insurer of a City-owned vehicle operated by appellant at the time of the motor vehicle accident, had a duty to indemnify appellant? We answer that question in the affirmative, and accordingly, we reverse the judgment of the circuit court and remand the case for further proceedings consistent with this opinion.

BACKGROUND On April 8, 2002, appellant was employed by the City as a Captain in the Baltimore City Fire Department (“BCFD”). On that date, appellant was scheduled to work his regular shift from 7:00 a.m. to 5:00 p.m. At approximately 4:30 p.m., while driving a City-owned vehicle, appellant picked up his children from school. At approximately 4:50 p.m., as appellant was driving his children home to feed them dinner, appellant’s vehicle collided with the rear of a vehicle operated by Daniel Caulk.

At the time of the impact, Caulk was lawfully stopped at a traffic signal on the westbound side of Liberty Road, near the intersection with Burmont Road, in Baltimore County. On May 13, 2003, Erie Insurance Group (“Erie”), as subrogee of Caulk, filed a complaint in the District Court of ⁴⁵² Maryland for Baltimore County against both appellant and the City. 2 In its complaint, Erie alleged, inter alia: For that on or about April 8, 2002, the Defendant, Calvin B. Edwards, Jr., while acting as the agent, servant and/or employee of the Defendant, Mayor and City Council of Baltimore, negligently and carelessly struck the vehicle owned by Daniel Caulk, whose vehicle was lawfully and properly stopped for traffic on Westbound Liberty Road near the intersection with Burmont Road in Baltimore County. And the damages to Daniel Caulk’s vehicle were caused by the negligence of the Defendant, Calvin B. Edwards, Jr., in that he failed to keep a proper lookout, failed to yield right of way and generally operated his vehicle in a negligent and careless manner thereby colliding with the Caulk vehicle. The Defendant, Mayor and City Council of Baltimore, was negligent in that he entrusted the vehicle to the Defendant, Calvin B. Edwards, Jr., who operated the vehicle as the agent, servant and/or employee of the Defendant, Mayor and City Council of Baltimore, and the Defendant, Mayor and City Council of Baltimore, as the owner of the vehicle is vicariously liable for the conduct of the Defendant, Calvin B. Edwards, Jr. his agent, servant and/or employee, who was driving the vehicle.

Thereafter, on June 30, 2003, appellant received a letter from the City’s Law Department, which informed him of the City’s intent to deny coverage for the April 8, 2002 accident. Specifically, the letter advised appellant that the City would not defend him in the district court lawsuit or indemnify him if a judgment was rendered against him, because the allegations in the complaint placed him “outside the scope of [his] employment” and “not acting within [his] authorized official capacity at the time of the incident.” ⁴⁵³ On August 26, 2003, a trial was held in the district court. At the conclusion of the trial, the court (Wilson, J.) gave an oral opinion from the bench: This court must be guided by the law with respect to whether indeed on this occasion there was agency between Captain Edwards at the time and the Mayor and City Council of Baltimore with respect to an accident which occurred on April the [8]th of 2002. It is true to be certain that there is a presumption of agency as stated by counsel.

State Farm verses Martin Marietta does presume an agency between principal and agent, which is rebuttable, but evidence [was] produced to the contrary. Before me I have the testimony and Mr. Edwards acknowledges that on the date and time in question he had picked up his two children from school and was transporting them to his house with the intention of preparing a dinner meal for them to feed them before he again returned to a work assignment at the community action meeting to be held in Mondawmin. The accident occurs while Mr. Edwards is in the process of transporting his two minor children home. The court must look to see that if at the time of the event the defendant, Mr. Edwards, was furthering the business o f his employer, or as counsel stated, acting in furtherance of his own personal goals.

If he [was] acting in furtherance of his own personal goals there is no agency, he is beyond the scope of his duties as a fire department employee and therefore there would be no coverage extended to him through the Mayor and City Council for Baltimore City. The testimony is that at the time of this accident he was transporting his children home for the purpose of preparing dinner. The chief testified that that was not in furtherance of any fire department business. It very well may have been a common practice that individuals who were assigned ⁴⁵⁴ these cars used them for many purposes occasionally beyond the scope of their employment, but it is for this court to consider on this occasion whether this defendant, Mr. Edwards, was outside the scope of his employment, as he was not engaged in the business of the Mayor and City Council for Baltimore City.

He was not furthering the business of the fire department. On the date and time of this event he was beyond the scope of his employment by transporting his children in the nonemergency service vehicle to his home for the purpose of preparing their dinner. There was no evidence to suggest that the Mayor and City Council for Baltimore in any way ratified his actions or took any steps to accept or adopt as their responsibility his course of action in taking his children home for dinner on the date and time this accident occurred. Upon those findings, the district court entered judgment in favor of the City as to Erie’s claim.

With respect to Erie’s claim against appellant, the district court entered a judgment against him in the amount of $8,094.84 for property damage and car rental expenses, plus $40.00 in court costs. Appellant did not appeal the district court judgment. On January 29, 2004, appellant assigned to Erie his claim for indemnification against the City. On March 8, 2004, appellant, to his own use and the use of Erie, filed a complaint for declaratory relief against the City in the Circuit Court for Baltimore County seeking, inter alia, indemnification for the judgment entered against him by the district court. 3 Of importance to this appeal, appellant alleged in the complaint that the City was self-insured pursuant to Md.Code (1977, 2006 Repl.Vol.), § 17-103 of the Transportation Article (“TransArt.”), that the City failed to defend appellant in the district court litigation, and that the City failed to indemnify appellant for the judgment entered against him and in favor of Erie.

Appellant asserted that “[a]n actual controversy therefore exists between [appellant] and [the City] as to whether ⁴⁵⁵ the [City], a self-insured, can disclaim its obligation to indemnify [appellant] for the judgment entered against him.” The City answered, asserting that appellant failed to allege an actionable controversy, that appellant was acting outside the scope of his employment when the accident occurred, and that, as a result, the City was under no duty to defend or indemnify appellant in the district court action under the Local Government Tort Claims Act (“LGTCA”). See Md.Code (1973, 2006 Repl.Vol.), §§ 5-301-5-304 of the Courts & Judicial Proceedings Article. In response to appellant’s request under the Public Information Act, the Motor Vehicle Administration produced the self-insurance documentation for the City-owned vehicle that appellant was operating when the accident occurred on April 8, 2002. The documentation revealed that, on the date of the accident, the City-owned vehicle was insured for the mandatory minimum limits for bodily injury and property damage liability as required by Trans.

Art. § 17-103(b). Later, in response to a Request for Admissions propounded by appellant, the City admitted that neither its self-insurance application nor the guarantee in effect on April 8, 2002, contained a permissive user clause. In general, a permissive user clause excludes liability insurance coverage when a motor vehicle is not operated within the scope of permission. On November 1, 2004, the circuit court held a hearing on the merits of the declaratory judgment action.

Thereafter, on November 29, 2004, the circuit court ruled that the City had no duty to defend or indemnify appellant, because the district court had “conclusively determined” that appellant was acting outside the scope of his employment with the City at the time of the accident. In a Memorandum Opinion and Order, the circuit court provided the following rationale for its ruling: This court cannot review a final decision of the District Court if it is not properly appealed. The decision of the District Court conclusively determined that Captain Edwards was outside the scope of his employment. Therefore, the LGTCA firmly established that Baltimore City was not ⁴⁵⁶ required to indemnify or defend Captain Edwards in the vehicular tort action in the District Court. [Maryland Code (1973, 2002 Repl.Vol.), section] 5-524 [of the Courts and Judicial Proceedings Article] requires that the local government cannot raise governmental immunity as a defense where the tort occurred while the vehicle was ‘in government service or performing a task of benefit to the government.’ ...

Both the ‘scope of employment language’ and the ‘task for benefit’ language serve the same purpose, which is to require the local government to indemnify and defend the actions of its employees when they are acting on behalf of the government. Therefore, both LGTCA [section] 5-303(b)(l) and [section] 5-524 only require the local government to indemnify or defend where the employee is acting on behalf of the local government. BGE Home Products [& Services, Inc. v. Owens, 377 Md. 236 , 833 A.2d 8 (2003) ] holds that a ‘permissive user clause,’ with a private self-insured entity, which excludes coverage when a motor vehicle is not operated within ‘the scope of permission,’ cannot be found by implication where not specifically set forth in the self-insurance documents----The City of Baltimore is not a private self-insured entity. Rather, the [] City is a local government, which falls under the purview of the LGTCA.

The LGTCA, by statutory requirement, places permissive user clauses in local government’s self-insured contracts. Thus, the lack of the specific language requiring a permissive user clause does not present the same problem to a local government as it does to a municipality [sic]. For the reasons set forth above, BGE Home Products is not controlling in this case. Thereafter, appellant timely filed the instant appeal.

DISCUSSION At the time of the accident on April 8, 2002, the City played three distinct legal roles. The City was simultaneously (1) the ⁴⁵⁷ local government employer of appellant, who was the operator of the “at-fault” vehicle, (2) the owner of the “at-fault” vehicle, and (3) the self-insurer of the “at-fault” vehicle. Each of these roles carries with it different legal rights and responsibilities for the City. Unfortunately, the parties and the circuit court blurred the distinction among these roles in the case sub judice.

Accordingly, a separate analysis of each role of the City, and the legal effect thereof when applied to the facts of the instant case, will be of assistance in resolving the issue presented in this appeal. I. The City’s Liability as Employer of Appellant under the LGTCA In the district court action, Erie sued appellant, individually, and claimed that appellant negligently struck the vehicle of its insured “while acting as the agent, servant and/or employee of the [City].” As noted, at the conclusion of the trial, the district court entered judgment in favor of Erie and against appellant in the amount of $8,094.84, plus $40.00 in court costs. The first question thus is whether the City is liable for the payment of the judgment against appellant under the LGTCA, because appellant was an employee of the City at the time of the accident. The LGTCA is a defense and indemnification statute, Hines v. French, 157 Md.App. 536, 571 , 852 A.2d 1047 (2004), the purpose of which in part is “to limit the liability of local governments and require them to provide a defense to their employees under certain circumstances.” Williams v. Prince George’s County, 112 Md.App. 526, 553 , 685 A.2d 884 (1996).

Section 5-302(a) of the LGTCA states that a local government must provide a legal defense for its employees in tort actions alleging tortious conduct “within the scope of employment with the local government.” 4 Section 5 — 303(b)(1) then pro ⁴⁵⁸ vides that, except for punitive damages, a local government is liable for any judgment against its employee for damages from tortious conduct “committed by the employee within the scope of employment with the local government.” 5 Under the LGTCA, the local government also may not assert governmental or sovereign immunity to avoid its duty to defend or indemnify its employees. LGTCA § 5-303(b)(2). The Court of Appeals has explained: The [LGTCA], makes all entities defined therein as “local governments” responsible for the legal defense of their employees, and liable for judgments for compensatory damages rendered against their employees, in suits against the employees based on tortious acts committed in the scope of their governmental employment. In addition, the LGTCA prohibits local governments from asserting the defense of governmental immunity to avoid this responsibility and liability, and it establishes monetary caps per individual claim and occurrence on the recoverable damages.

Housing Auth. of Baltimore City v. Bennett, 359 Md. 356, 357-58 , 754 A.2d 367 (2000) (emphasis added). Moreover, “[t]he only liabilities created by the LGTCA or expressly dealt with in the LGTCA concern tort suits against government employees.” Id. at 373, 754 A.2d 367 (emphasis added). In other words, under the LGTCA, “a plaintiff may not sue a local government ... directly but must ⁴⁵⁹ sue, instead, the employee.” Williams v. Montgomery County, 123 Md.App. 119, 126 , 716 A.2d 1100 (1998) aff'd, 359 Md. 379 , 754 A.2d 379 (2000); see Williams v. Prince George’s County, 112 Md.App. 526, 552 , 685 A.2d 884 (1996) (“[Section] 5-403 does not provide a method for directly suing the County or other local governments.”). In the case sub judice, at the time of the accident, appellant was an employee of the City, a local government of Maryland.

See LGTCA § 5-301(d)(4) (defining Baltimore City as a local government). As a local government employer, the City is obligated “to pay judgments awarded in actions against [its] employees for tortious acts or omissions committed within the scope of employment. ” Ennis v. Crenca, 322 Md. 285, 292 , 587 A.2d 485 (1991) (emphasis added). In its opinion, the circuit court observed that the district court found that, at the time of the accident, appellant was acting outside of the scope of his employment because “he was not furthering the business of the fire department.” Because the district court case had not been appealed, the circuit court concluded that the district court’s decision could not be reviewed and that the district court “conclusively determined that [appellant] was outside the scope of his employment.” Therefore, according to the circuit court, the City was not required to indemnify or defend appellant in the district court action under the LGTCA. Appellant contends in this Court that the circuit court erred, as a matter of law, when it “opined it was bound by the District Court.[’s] conclusion that [appellant] was outside the scope of his employment.” Specifically, appellant claims that the initial decision of whether a potentiality of insurance coverage exists is reviewable de novo by a court in a declaratory judgment action.

The City counters by arguing that (1) under the doctrine of collateral estoppel, the district court’s determination of “outside the scope of employment” is final and cannot be relitigated, (2) a de novo review of the district court action can occur only when an appeal is taken and the amount in controversy does not exceed $5000, and (3) a de ⁴⁶⁰ novo review of a decision regarding potentiality of insurance coverage applies only to an “insurer’s initial decision concerning coverage,” not factual findings of a court of competent jurisdiction. In his reply brief, appellant apparently abandons his argument and concedes that the district court’s factual finding of “outside the scope of employment” is final and binding with regard to the City’s liability under the LGTCA. Appellant states that he “is not attempting to relitigate the issue of the City’s liability, in its capacity as his employer, for his conduct involved in the motor tort,” and “was not seeking a de novo review of the District Court[’s] decision in filing his Complaint for Declaratory Judgment.” Instead, appellants “was seeking a de novo review of the City’s decision, in its capacity as an insurer, as to whether a potentiality of coverage existed for [appellant] in the [district court action].” (Emphasis in original). When declaring the district court’s factual finding of “outside the scope of employment” to be conclusive and unreviewable, the circuit court limited its holding to the City’s liability as appellant’s employer under the LGTCA.

We agree. Under the LGTCA, a local government is obligated to indemnify its employees for judgments arising out of their tortious conduct only when such conduct is committed within the scope of their employment with the local government. LGTCA § 5-303(b). The district court found that appellant was acting outside the scope of his employment at the time of the accident.

When the district court action was not appealed, that finding became final, and the doctrine of collateral estoppel precluded any relitigation thereof in the case sub judice. 6 ⁴⁶¹ See Potomac Design, Inc. v. Eurocal Trading, Inc., 839 F.Supp. 364, 366 (D.Md.1993) (stating that when an issue of fact or law is actually litigated and determined by a valid final judgment, and that determination is essential to the judgment, the determination is conclusive in a later action between the parties, whether the same or a different claim is asserted); see also Welsh v. Gerber Products, 315 Md. 510, 516 , 555 A.2d 486 (1989). Accordingly, the circuit court did not err in concluding that the City, as appellant’s employer, was not liable to pay the judgment against appellant under the LGTCA. 7 II. The City’s Liability as Owner of the “At-Fault” Vehicle In the district court case, Erie also named the City as a defendant, because the City, “as the owner of the vehicle is vicariously liable for the conduct of [appellant] [its] agent, servant, and/or employee, who was driving the vehicle.” Thus, separate and apart from the City’s obligations under the LGTCA, Erie was seeking to impose liability on the City by virtue of its status as the owner of the “at-fault” vehicle under common law agency principles. It is well settled that the “[m]ere ownership of a car does not impose liability for injuries caused in the driving of it.” Toscano v. Spriggs, 343 Md. 320, 325 , 681 A.2d 61 (1996) (internal quotation omitted).

Nevertheless, “when the owner has not himself been the negligent cause of an injury, he can be held liable vicariously only when the negligence has been that of his servant engaged in his affairs. He is not even liable for the negligence of his general servant, his chauffeur, for instance, unless at the time the servant has been conducting the owner’s affairs.” ⁴⁶² Id. (quoting Schneider v. Schneider, 160 Md. 18, 20-21 , 152 A. 498 (1930)). This common law doctrine is one of agency and “rests on the relationship of the parties and the nature of the expedition during which the accident occurred.” Slutter v. Homer, 244 Md. 131, 139 , 223 A.2d 141 (1966).

In other words, the doctrine is not limited to an employer-employee relationship, but covers any agency relationship, paid or voluntary. See Shipley v. Walker, 230 Md. 133, 136-37 , 186 A.2d 472 (1962) (stating that “[w]e think it is clear that [the driver] was not the agent or servant of [the owner] at the time of the accident” (emphasis added)). In Stutter, the Court of Appeals quoted with approval comment j of Section 491, Restatement, Second, Torts: * * * [I]f the purpose of the journey is for the benefit of the owner, even though it is also for the benefit of him who is permitted to drive, the owner may under the principles of the law of Agency be regarded as the master of the driver even though no wages or reward other than the participation in the drive is paid to him. Slutter, 244 Md. at 140 , 223 A.2d 141 (alternation in original) (internal quotations omitted). “[U]nder Maryland law there is a presumption that ‘the negligent operator of a vehicle is the agent, servant, or employee of the owner acting within the scope of his employment.’ ” Mackey v. Dorsey, 104 Md.App. 250, 260 , 655 A.2d 1333 (1995) (quoting Williams v. Wheeler, 252 Md. 75, 82 , 249 A.2d 104 (1969)); See Toscano, 343 Md. at 325 , 681 A.2d 61 ; Vonderhorst Brewing Co. v. Amrhine, 98 Md. 406, 411 , 56 A. 833 (1904).

This presumption is a rebuttable one. Mackey, 104 Md.App. at 260 , 655 A.2d 1333 . Here, the district court ruled that the City was not liable as the owner of the vehicle operated by appellant at the time of the accident on April 8, 2002. The district court explained that it was “guided by the law with respect to whether on this particular occasion there was agency between [appellant] at the time and the [City].” Noting that the presumption of ⁴⁶³ agency is a rebuttable one, the court reviewed the evidence to determine whether or not at the time of the accident appellant “was furthering the business of his employer, or ... acting in furtherance of his own personal goals.

If he [was] acting in furtherance of his own personal goals there is no agency,.... ” The district court found that, at the time of the accident, appellant “was not engaged in the business of the [City] [] ... by transporting his children in the nonemergency service vehicle to his home for the purpose of preparing their dinner.” 8 Accordingly, the district court held that the City was not liable to Erie as the owner of the vehicle operated by appellant. No other basis for liability of the City was considered by the district court, 9 and no appeal was taken from the decision of the district court. In the instant appeal, appellant does not attack directly the district court’s holding that the City was not liable as the owner of the vehicle operated by appellant at the time of the accident. Instead, appellant asserts that the circuit court erred when it determined that the language contained in LGTCA § 5 — 303(b)(1) “is the functional equivalent to the language contained in [Md.Code, § 5-524 of the Courts & Judicial Proceedings Article (‘C.J.’) ].” Specifically, appellant claims that C.J. § 5-524 “provides even broader requirements than the LGTCA,” because “[t]he statute focuses on the plaintiffs claim that property damage was caused by negligent use of the motor vehicle while in ‘government service’ or ‘performing a task of benefit to the government.’ ” According to appellant, it is the allegations in the complaint in district court that “triggered the requirement that the City provide [appellant] with a defense and further acted to prohibit the City from attempting to raise the defense of sovereign or governmental immunity.” Both the court and appellant mis ⁴⁶⁴ construe C.J. § 5-524 because they confuse the legal responsibilities of the City as appellant’s employer with the City’s legal obligations as the owner of the vehicle operated by appellant.

LGTCA § 5-303(b)(l) provides that, except for punitive damages, “a local government shall be liable for any judgment against its employee for damages resulting from tortious acts or omissions committed by the employee within the scope of employment with the local government.” On the other hand, C.J. § 5-524 reads in relevant part: An owner or lessee of any motor vehicle ... may not raise the defense of sovereign or governmental immunity, to the extent of benefits provided by the security accepted by the Motor Vehicle Administration under § 17-103 of the Transportation Article, in any judicial proceeding in which the plaintiff claims that personal injury, property damage, or death was caused by the negligent use of the motor vehicle while in government service or performing a task of benefit to the government. (Emphasis added). It is clear that section 5-524, by its plain language, applies to a local government as the owner of a vehicle, not as an employer under the LGTCA. The purpose of section 5-524 is simply to place a local government in the same position, to the extent of the mandatory minimum insurance requirements, as any owner of a vehicle who is sued on account of the