Gallegos v. Allstate Insurance

KENNEY, J. Appellants, Christina Gallegos and Thomas Stinger, appeal a decision of the Circuit Court for Montgomery County granting summary judgment in favor of appellee, Allstate Insurance Company (“Allstate”), which had filed a declaratory judgment action to determine its liability under a homeowner’s policy ²¹⁵ sold to Brenda Ann Epley. 1 Appellants present four questions on appeal, 2 which we have consolidated into one: Did the circuit court err in granting summary judgment for Allstate? Finding no error, we affirm. FACTUAL AND PROCEDURAL BACKGROUND Brenda Ann Epley was a registered family day care provider 3 who operated a family day care home at her residence, 18 Maplewood Court in Gaithersburg. One of the children she cared for was appellants’ son, Stacy Rae Stinger. ²¹⁶ While caring for Stacy on June 7, 1999, when he was two- and-a-half-years old, Epley drove him in her 1994 Dodge Caravan from her residence to another residence, where she was to perform cleaning services.

Stacy went inside with Epley, but when he began to get tired, she brought him back outside to the van. The outside temperature exceeded 90 degrees Fahrenheit. She strapped Stacy in his car seat and left him there unattended with only the front windows slightly open. Epley went back inside the house to finish cleaning.

Stacy was subsequently overcome by the heat and died of hyperthermia. Allstate does not dispute that Epley’s negligence caused Stacy’s death. At the time of Stacy’s death, Epley had two insurance policies with Allstate, an automobile liability policy and a policy entitled “Allstate Renter’s Policy.” Her renter’s policy contained a family day care coverage endorsement. 4 On April 5, 2000, appellants filed a complaint in the Circuit Court for Montgomery County against Epley for wrongful death. On July 14, 2000, Allstate filed in the Circuit Court for Montgomery County the declaratory judgment action that is the subject of this appeal.

Allstate sought a declaration from the court that, under the terms of the renter’s policy, “[a]ll claims arising from the death of Stacy Rae Stinger are excluded from coverage [under the renter’s insurance policy], and Allstate has no liability to defend or indemnify Brenda Ann Epley for any claims arising from the contract for insurance.” On April 25, 2001, the circuit court granted summary judgment in favor of Allstate, ruling that the motor vehicle exclusions contained in Epley’s renter’s policy were effective and not contrary to the public policy of the State as ²¹⁷ expressed in Md.Code (1997, 2000 Supp.), § 19-202 of the Insurance Article (“Ins.”). 5 Appellants filed a motion to alter or amend judgment, which was denied on June 27, 2001. Appellants timely appealed both the grant of summary judgment in favor of Allstate and the denial of their motion to alter or amend judgment. STANDARD OF REVIEW A summary judgment motion is not a substitute for trial. Rather it is used to dispose of cases when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.

The standard for appellate review of a trial court’s grant of summary judgment is whether the trial judge was legally correct in his or her rulings. In granting a motion for summary judgment, the trial judge may not resolve factual disputes, but instead is limited to ruling on matters of law.... If any inferences may be drawn from the well-plead facts, the trial court must construe those inferences in the light most favorable to the non-moving party. The existence of a dispute as to some non-material fact will not defeat an otherwise properly supported motion for summary judgment, but if there is evidence upon which the jury could reasonably find for the non-moving party or material facts in dispute, the grant of summary judgment is improper.

Okwa v. Harper, 360 Md. 161, 178 , 757 A.2d 118 (2000) (citations omitted). Although granting summary judgment in a declaratory judgment action is “ ‘the exception rather than the rule[,]’ ” it is available in such cases. Utica Mutual Ins. Co. v. Miller, 130 Md.App. 373, 380 , 746 A.2d 935 , cert. denied, 359 Md. 31 , 753 A.2d 3 (2000) (citations omitted).

Because the material facts in this case were essentially undisputed, we decide only whether the circuit court’s ruling was legally correct. 6 ²¹⁸ DISCUSSION Appellants contend that the trial court erred when it ruled that Ins. § 19-202 does not invalidate exclusions in homeowner’s or renter’s policies that contain a home day care endorsement. Appellants argue that insurance coverage is mandated by Ins. § 19-202, infra, and, consequently, only exclusions expressly allowed by the General Assembly can be included in such policies. Appellants also argue that the trial court erred when it interpreted Ins. § 19-202 in conjunction with Ins. § 19-106, infra, ultimately finding that they are mutually exclusive. Allstate contends that § 19-202 is not directly applicable because Epley was covered by a renter’s, not a homeowner’s, liability policy.

It also argues that insurance is not compulsory for day care providers and that exclusions are allowable. Allstate urges us to affirm the trial court’s interpretation of Ins. §§ 19-106 and 19-202. Coverage and Exclusions The Family Liability Protection section of Epley’s renter’s policy provides that Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence [7] to which this policy applies, and is covered by this part of the policy. We may investigate or settle any claim or suit for covered damages against an insured person.

If an insured person is sued for these damages, we will provide a defense with counsel of our choice, even if the allegations are groundless, false or fraudulent. We are not obligated to pay any claim or judgment after we have exhausted our limit of liability. The Home Day Care Coverage Endorsement contains the following coverage provisions: ²¹⁹ For an additional premium and when the Policy Declarations indicates [sic] that Home Day Care Coverage applies, the coverages of your policy are extended to apply to the home day care business conducted by an insured person at the residence premises. [8] All changes to your policy as provided by this endorsement apply to Home Day Care Coverage only. We do not cover a family day care home business when, at any given time, a day care provider cares for: 1. more than two children under the age of two years; [9] or 2. more than eight children, of whom no more than two may be under the age of two years.

The day care provider’s own children under the age of two years shall be counted as children served. [10] Coverage X—Family Liability Protection and Coverage Y—Guest Medical Protection apply to bodily injury and property damages arising out of the operation of a home day care business by an insured person at the residence premises for which the insured person receives monetary or other compensation. ²²⁰ Three exclusionary clauses in Epley’s renter’s policy relate to liability arising from the ownership and use of motor vehicles. One of the clauses provides: We do not cover bodily injury or property damage arising out of: a) the negligent supervision by an insured person of any person; or b) any liability statutorily imposed on any insured person arising from the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any aircraft, watercraft, motor vehicle or trailer which is not covered under Section II [11] of this policy. The second clause, which is contained in Section II, entitled “Family Liability and Guest Medical Protection,” states: We do not cover bodily injury or property damage arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motor vehicle or trailer. However, this exclusion does not apply to: a) a motor vehicle in dead storage or used exclusively on an insured premises; [12] ²²¹ b) any motor vehicle designed principally for recreational use off public roads, unless that vehicle is owned by an insured person and is being used away from an insured premises; c) a motorized wheel chair; d) a vehicle used to service an insured premises which is not designed for use on public roads and not subject to motor vehicle registration; e) a golf cart owned by an insured person when used for golfing purposes; f) a trailer of the boat, camper, home or utility type unless it is being towed or carried by a motorized land vehicle; g) lawn and garden implements under 40 horsepower; h) bodily injury to a residence employee.

The third motor vehicle exclusion is contained in the family day care endorsement: We do not cover bodily injury or property damage occurring at the residence premises and arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of: a) draft or saddle animals; b) vehicles used with such animals; c) motorized land vehicles; or d) watercraft by an insured person or employee in the home day care business. The Rules of Statutory Construction and the Statutes Appellants’ argument centers around the contention that the trial court erred in its interpretation of Ins. §§ 19-106 and ²²² 19-202. Consequently, we review the rules of statutory construction: The principles of statutory construction are not novel. “Every quest to discover and give effect to the objectives of the legislature begins with the text of the statute.” Huffman v. State, 356 Md. 622, 628 , 741 A.2d 1088, 1091 (1999). If the legislature’s intentions are evident from the text of the statute, our inquiry normally will cease and the plain meaning of the statute will govern.

See id. See also Martin v. Beverage Capital Corp., 353 Md. 388, 399 , 726 A.2d 728, 733 (1999); Philip Elec. North America v. Wright, 348 Md. 209, 216-17 , 703 A.2d 150, 153 (1997); Schuman, Kane, Felts & Everngam v. Aluisi, 341 Md. 115, 119 , 668 A.2d 929, 931 (1995). We bear in mind, however, that the plain-meaning rule is elastic, rather than cast in stone.

See Kaczorowski v. Mayor of Baltimore, 309 Md. 505, 513 , 525 A.2d 628, 632 (1987). If persuasive evidence exists outside the plain text of the statute, we do not turn a blind eye to it. See Kaczorowski 309 Md. at 514 , 525 A.2d 628 . We often look to the legislative history, an agency’s interpretation of the statute, and other sources for a more complete understanding of what the General Assembly intended when it enacted particular legislation.

See Harris v. State, 331 Md. 137, 146 , 626 A.2d 946, 950 (1993). In so doing, “[w]e may also consider the particular problem or problems the legislature was addressing, and the objectives it sought to attain.” Sinai Hosp. of Baltimore v. Department of Employment and Training, 309 Md. 28, 40 , 522 A.2d 382, 388 (1987). This enables us to put the statute in controversy in its proper context and thereby avoid unreasonable or illogical results that defy common sense. See Huffman, 356 Md. at 628 , 741 A.2d at 1091 ; Marriott Employees Fed. Credit Union v. Motor Vehicle Admin., 346 Md. 437, 445 , 697 A.2d 455, 459 (1997); Kaczorowski, 309 Md. at 513 , 525 A.2d at 632 . “We should first attempt to ascertain [the legislature’s] intent from the statutory language, reading pertinent parts of the legislative language together, giving effect to all of ²²³ those parts if we can, and rendering no part of the law surplusage.” Sinai Hosp. of Baltimore, 309 Md. at 39-40, 522 A.2d at 388 .

Adamson v. Correctional Medical Services, Inc., 359 Md. 238, 251-52 , 753 A.2d 501 (2000). Ins. § 19-106 reads as follows: An insurer that issues or delivers a policy or contract of motor vehicle liability insurance in the State shall offer to provide to a policyholder, who is registered as a family day care provider under Title 5, Subtitle 5, Part V of the Family Law Article, coverage in at least the amount required under § 17-103 [13] of the Transportation Article [ (“Trans.”) ] for liability that results from bodily injury: (1) to a family day care child while the child is a passenger in an automobile; and (2) that arises out of an insured’s activities as a family day care provider. Ins. § 19-202 reads as follows: An insurer that issues or delivers a policy or contract of homeowner’s liability insurance in the State shall offer to provide to a policyholder, who is registered as a family day care provider under Title 5, Subtitle 5, Part V of the Family Law Article, coverage of at least $300,000 for liability that results from bodily injury, property damage, or personal ²²⁴ injury arising out of an insured’s activities as a family day care provider. When these provisions were first enacted in 1986 pursuant to Senate Bill 899, they were combined in one statute that provided: (a) Homeowner’s liability insurance.—Any insurer that issues or delivers a policy or contract of homeowner’s liability insurance in Maryland shall offer, to any policyholder who is registered under Part V of Subtitle 5 of the Family Law Article as a family day care home provider, the option of purchasing coverage for liability as a result of bodily injury, property damage, or personal injury arising out of the insured’s activities as a family day care provider in an amount not less than $800,000.

(b) Motor vehicle liability insurance.—-Any insurer that issues or delivers a policy or contract of motor vehicle liability insurance in Maryland shall offer, to any policyholder who is registered under Part V of Subtitle 5 of the Family Law Article as a family day care home provider, the option of purchasing coverage for liability as a result of bodily injury to a family day care child while a passenger in an automobile arising out of the insured’s activities as a family day care provider in an amount not less than that required under § 17-103 of the Transportation Article. Md.Code (1957,1986 Repl.Vol.), Art. 48A, § 481D. When Senate Bill 899 was first introduced, it contained only the provision requiring insurers to offer at least $300,000 worth of coverage to registered family day care homes. 1986 Senate Journal 791. The statute was introduced because home day care providers were being dropped from their homeowner’s insurance.

Liability Insurance—Family Day Care Homes: Hearing on S.B. 899, Senate Finance Committee Minutes (Feb. 25, 1986) (hereinafter “Senate Finance Committee Minutes”). There were also complaints about the lack of affordable coverage. Id. Testimony at the Senate Finance Committee hearing, however, urged amendments to the bill to require insurers to also ²²⁵ offer automobile coverage to family day care homes.

Senate Finance Committee Minutes. Subsequently, on March 20, 1986, the bill was amended to include the language pertaining to automobile coverage. Journal of the Proceedings of the Senate of Maryland 1955 (1986). The statute went into effect on June 1, 1986, 1986 Md. Laws, Chap. 120, and even though it was split into two different provisions when the Insurance Article was compiled, the language of the provision has not undergone substantive change.

The Revisor’s Note to Ins. § 19-106 states: This section is new language derived without substantive change from former Art. 48A, § 481D(b). In the introductory language of this section, the requirement that an insurer offer “to provide” coverage is substituted for the former requirement that an insurer offer “the option of purchasing” coverage for brevity. Also in the introductory language of this section, the former reference to a family day care “home” provider is deleted to conform to the terminology used in Title 5, Subtitle 5, Part V of the Family Law Article and for consistency within this section. The Revisor’s Note to Ins. § 19-202 is nearly identical.

With this background in mind, we now turn to the arguments presented. Applicability of Ins. § 19-202 to Renter’s Policies In its ruling, the court did not explicitly address whether Ins. § 19-202 is applicable to renter’s policies, but the issue was briefly discussed at the hearing: [APPELLANTS’ ATTORNEY]: The—I don’t—I will touch upon this briefly, but the renter’s versus the homeowner’s policy— THE COURT: That doesn’t bother me. [APPELLANT’S ATTORNEY]: Doesn’t bother you? THE COURT: That doesn’t—I think it is sufficiently analogous, although, you know, these sometimes have technicalities that are—that the appellate courts seem to like— ²²⁶ [APPELLANT’S ATTORNEY]: Right. I guess then I— then I will pass that issue by and just briefly conclude here.

The scope of the possible exclusions that could be in these policies—• The renter’s policy issue was raised in the trial court, and although with scant specificity, the trial court clearly found a renter’s policy to be “sufficiently analogous” to homeowner’s liability insurance as to be included within the legislation. Neither “homeowner’s policy” nor “renter’s policy” is a defined term in the general definitions of the Insurance Article, but the definition of property insurance refers to “homeowner’s insurance:” (1) “Property insurance” means insurance on real or personal property on land, in water, or in the air or an interest in real or personal property against loss or damage from any hazard or cause and against loss that is consequential to the loss or damage. (2) “Property insurance” includes fire insurance, flood insurance, extended coverage insurance, homeowners insurance, farm owners insurance, allied lines insurance, earthquake insurance, growing crops insurance, aircraft physical damage insurance, automobile physical damage insurance, glass insurance, livestock insurance, and animal insurance. (3) “Property insurance” does not include insurance against legal liability for loss or damage to real or personal property.

Ins. § l-lOl(gg) (emphasis supplied). The Maryland Property Insurance Availability Act provides: “Homeowner’s insurance” means insurance for residential property that provides a combination of coverages including: (1) fire; (2) extended coverage; (3) vandalism and malicious mischief; (4) burglary; ²²⁷ (5) theft; and (6) personal liability. Ins. § 25-401(e). A homeowner’s policy is a form of property insurance.

One commentator on insurance law related to residential property has remarked in regard to homeowner’s and renter’s insurance: Homeowners insurance has become commonplace in the United States largely because, as one would expect, so many individuals and families are “homeowners” in the literal sense that they own their own residences and need property insurance for them. In addition, property insurance for the contents of apartments and other personal residences, whether owned by the occupants or not, is available under homeowners policies (often referred to as “renters” insurance). Special variations of “homeowners” or “renters” insurance are also commonly available to provide protection for hybrid forms of residential ownership, such as the condominium, the co-operative, and the homeowners association. Property insurance for personal residences is usually sold in a “package” policy together with some kind of liability coverage.

As a result, the variety of liability insurance usually referred to as “homeowners” is purchased as an adjunct to property insurance by both owners and renters. In most situations, however, regardless of the exact form of the residential ownership or leasehold interest, the liability coverages sold in connection with personal residences are very similar. Rowland H. Long, 2 THE LAW OF LIABILITY INSURANCE, § 9.01 (1967) (footnotes omitted). The stated purpose of Art. 48A, § 481D was to require that any insurer issuing or delivering a homeowner’s liability insurance policy or motor vehicle liability insurance policy in this State shall offer to an insured policy holder who is registered as a family day care home provider certain ²²⁸ insurance coverage for the liability arising out of the insured’s activities in providing a family day care home. 1986 Maryland Laws Ch. 120.

The statute as originally enacted was clearly meant to provide liability insurance for family day care providers, both in the “family day care home” and within automobiles. To exclude renter’s policies from the statute would be to create two classes of day care providers: homeowners who are presented the opportunity to purchase insurance coverage and renters who are not given the opportunity to purchase insurance. In light of the overall statutory scheme, this result would seem to us illogical. Indeed, we find Allstate’s argument that Ins. § 19-202 does not cover renter’s policies to be somewhat disingenuous in light of the fact that they offered and sold to Epley—and, presumably, to other insureds—a policy containing a family day care endorsement entitled “Home Day Care Coverage Endorsement—Maryland” that closely tracks Ins. § 19-202.

If Allstate believed that Ins. § 19-202 was not meant to cover family day care providers who rent, rather than own, their homes, would it offer renters such policies when apparently such coverage was not readily available prior to the legislation? Although renter’s policies are not expressly referred to in Ins. § 19-202, we hold that the statute is fairly read to include such policies. Mandatory Insurance Coverage and Public Policy Appellants argue that “where the legislature has mandated insurance coverage, the Courts will not create or permit exclusions that are not specifically set out in the statute.” Appellees argue that Ins. § 19-202 does not mandate insurance coverage. The trial court’s ruling on this issue was as follows: The defendants cite to an extensive number of cases regarding compulsory insurance, and seek to raise the public policy issue through that analogy. ²²⁹ The plaintiff, on the other hand, claims that there is no public policy involved because this provision is not a compulsory insurance provision under the existing case law.

The Court’s view is that this provision of Section 19-202 does not create compulsory insurance of the nature that is apparent in the case law cited by the defendants, or traditionally appearing in the statute regarding motor vehicle insurance as an example. However, it is the