Gallegos v. Allstate Insurance

WILNER, Judge. This case involves the interplay between Maryland Code, §§ 19-106 and 19-202 of the Insurance Article, each relating to insurance coverage for family day care providers. Section 19-106 requires insurers who write motor vehicle insurance in the State to offer certain minimum coverage to policyholders who are registered as family day care providers, to protect against liability arising from the day care activity while the child is a passenger in the insured motor vehicle. Section 19-202 requires insurers who write homeowner’s insurance to offer to such persons general liability coverage of at least $300,000 for injuries arising from family day care activity.

The issue before us is whether § 19-202 permits homeowner’s policies containing that coverage to exclude liability ⁷⁵⁰ for injury to a child (in this case the death of a child) that occurs (1) while the child is in the care of the insured as part of the family day care activity, but (2) while the child is a passenger in an automobile away from the insured’s home. The Circuit Court for Montgomery County and the Court of Special Appeals answered in the affirmative, and so shall we. BACKGROUND The underlying facts are not in substantial dispute. Maryland Code, § 5-550 of the Family Law Article, requires the State Department of Human Resources to implement a registration system for family day care homes. 1 With certain exceptions not relevant here, § 5-552 provides that a family day care home may not operate in Maryland unless it is registered.

Brenda Ann Eply was a registered family day care provider, operating from her rented home at 18 Maple-wood Court in Gaithersburg. One of the children in her care was two-and-a-half year old Stacy Stinger. On June 7, 1999, Ms. Eply and Stacy drove from her home to another house, where she was scheduled to perform cleaning services. Upon arrival, Eply brought Stacy into the house, but when he became sleepy, she returned him to her minivan, secured him in a safety seat, closed the windows, and left him there unattended while she completed her work.

The outside temperature that day was above 90 degrees, and, at some point, Stacy was overcome by the heat and died of hyperthermia. On April 5, 2000, Stacy’s parents, Christina Gallegos and Thomas Stinger, filed a wrongful death action ⁷⁵¹ against Eply in the Circuit Court for Montgomery County, seeking damages of $1,000,000. Ms. Eply had in force two insurance policies from respondent, Allstate Insurance Company. One was a standard policy of motor vehicle insurance, with a per person liability limit of $20,000 — the minimum required by Maryland law (see Maryland Code, § 17-108 of the Transportation Article).

That policy had no special endorsement for family day care activity, but Allstate has conceded liability under the policy and has offered to pay the policy limit of $20,000, presumably on its acceptance of the claim that Stacy died, due to Eply’s negligence, while he was a passenger in the covered vehicle. The second policy — the one at issue- — was a Renters Policy applicable principally to Eply’s home. The Renters Policy contained three kinds of basic coverage — Coverage C, providing coverage for damage to or the loss of personal property owned or used by Ms. Eply; Coverage X, providing family liability protection; and Coverage Y, providing guest medical protection. Under Coverage X, Allstate agreed, subject to exceptions and limitations stated in the policy, to pay damages that Ms. Eply became legally obligated to pay because of bodily injury arising from an “occurrence,” an “occurrence” being defined as an accident, including continuous exposure to substantially the same harmful conditions.

The policy listed 16 exclusions from that coverage, among them being injuries intended or reasonably expected to result from intentional or criminal acts or omissions of an insured, injuries covered by workers’ compensation, injuries arising from the ownership, occupancy, or use of aircraft or certain motor vehicles, injuries arising from the ownership, occupancy, or use of watercraft away from the insured home, injuries arising from the discharge of toxic substances (unless the discharge was sudden and accidental), injuries arising from the rendering or failure to render professional services or from business activities of an insured, and injuries caused by war or warlike acts. Under Coverage Y, Allstate agreed, subject to listed exceptions, to pay certain medical and medically-related expenses ⁷⁵² sustained as the result of an occurrence. As with Coverage X, the policy listed certain circumstances — 13 in number — that were excluded. Many were the same as those excluded from Coverage X, including injuries arising from the rendering or failure to render professional services, from business activities of the insured, or from the ownership, occupancy, or use of certain motor vehicles.

By special Home Day Care Coverage Endorsement, a fourth type of'coverage — Coverage DC — was included in the Renter’s Policy. Subject to certain exceptions, that endorsement extended Coverages X arid Y to injuries arising from the operation of Ms. Eply’s home day care business. The endorsement declared non-applicable to this coverage the exclusions in Coverages X and Y for injuries arising from the rendering or failure to render professional service or from Ms. Eply’s business activities, but said nothing with respect to the other exclusions listed under Coverages X and Y. In addition, the policy excluded from DC coverage (1) injuries arising out of sexual molestation, corporal punishment, or physical or mental abuse inflicted by or at the direction of an insured or an employee of an insured, and (2) injuries occurring at the residence premises and arising from the ownership, maintenance, use, or occupancy of draft or saddle animals, vehicles used with such animals, motorized land vehicles, or watercraft by an insured. The limit of liability under Coverage DC was $300,000.

On July 14, 2000 — -while the wrongful death action against Eply was in its early stage — Allstate filed an action for declaratory judgment in the Circuit Court for Montgomery County, naming Eply and Stacy’s parents as defendants. We shall refer to the defendants, collectively, as Gallegos. Upon the filing of the declaratory judgment action, and by agreement, further proceedings in the wrongful death action were stayed. In its complaint, Allstate asserted that, because Stacy’s death was caused and occurred away from Eply’s home and while Stacy was a passenger in a motor vehicle, there was no ⁷⁵³ coverage or potentiality of coverage under the Renter’s Policy and that Allstate therefore had no duty to defend or indemnify Eply under that policy. 2 Both sides filed motions for summary judgment.

Allstate relied on exclusions for injuries arising from the ownership, use, or occupancy of a motor vehicle in both Coverages X and Y and in Coverage DC. Gallegos contended (1) that those exclusions were not permitted by § 19-202 and were therefore void as against public policy, and (2) that, in any event, the only effective exclusion was that applicable to the DC coverage which, by its terms, was limited to injuries occurring at the residence and therefore did not apply to injuries resulting from the use of a motor vehicle away from the home. After a hearing and the announcement of its conclusions from the bench, the court, on April 25, 2000, entered an order that granted Allstate’s motion and declared that there was no potentiality of coverage under the Renter’s Policy and that Allstate therefore had no obligation under that policy to defend or indemnify Ms. Eply for any claims arising from Stacy’s death. In reaching that conclusion, the court rejected the construction placed on the policy by Gallegos and held that the more limited exclusion in the DC coverage for injuries arising from motorized land vehicles at the residence did not limit the effect of the exclusions in Coverages X and Y for injuries arising from the use of motor vehicles.

It also concluded that those exclusions were not prohibited by § 19-202 and were therefore not against public policy. Aggrieved, Gallegos appealed, but, in Gallegos v. Allstate, 144 Md.App. 213 , 797 A.2d 795 (2002), the Court of Special Appeals affirmed, largely for the reasons stated by the trial judge. On the public policy issue, the intermediate appellate court noted that the cases in which we have invalidated coverage exclusions on public policy grounds all involved in ⁷⁵⁴ surance coverages that were mandated by statute and declared that § 19-202 was not such a statute. It did not require home day care providers to purchase special coverage for their business activity but simply required insurers to offer such coverage.

Accordingly, the court concluded that § 19-202 was “not a compulsory liability insurance statute and a motor vehicle exclusion is not precluded by the legislature.” Id. at 230, 797 A.2d at 805 . The court also rejected Gallegos’s additional arguments that (1) as a matter of policy construction, the only applicable motor vehicle exclusion was that stated in Coverage DC, which was inapplicable to the situation at hand, and (2) because Stacy was not really a “passenger” in the van, the motor vehicle policy did not cover the injuries, that there was therefore a gap in coverage, and that the gap should be closed by extending coverage under the Renter’s Policy. Id. at 233-37 , 797 A.2d at 807-09 . Gallegos poses a number of questions in this Court, but they all relate to whether the motor vehicle exclusion is permissible under § 19-202.

We shall deal generally with that issue but shall treat one aspect of her argument separately. DISCUSSION Whether § 19-202 Permits Exclusions Relied Upon by Allstate Section 19-202 of the Insurance Article provides 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 injury arising out of an insured’s activities as a family day care provider.” Section 19-106 of that Article states: “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 ⁷⁵⁵ care provider under Title 5, Subtitle 5, Part V of the Family Law Article, coverage in at least the amount required under § 17-103 of the Transportation Article 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.” Gallegos looks at § 19-202 and sees nothing in it that permits any exclusions from the coverage that homeowner insurers are required to offer. Section 19-106, in her view, is essentially irrelevant. Family day care providers like Eply can purchase home day care endorsements to their motor vehicle policy if they want, but whether they do or do not has no effect on how § 19-202 should be construed.

As a public policy additive for her position, she suggests that § 19-202 serves three important public goals that would be lost if the statute is construed in the manner stated by the lower courts: (1) because it applies only to registered family day care providers, it encourages such persons to register with the Department of Human Resources and submit to regulation by that Department; (2) by assuring access to affordable liability coverage, it encourages persons to become family day care providers and thus helps to ensure the continued availability of that service; and (3) it increases the likelihood that parents of children in family day care homes will receive adequate compensation in the event of injury to their children while in day care. Gallegos worries that, if insurers are allowed to create contractual exclusions, the exclusions can, in effect, swallow up the coverage that the Legislature mandated be offered, thereby frustrating the purpose of the statute. Allstate responds that neither statute requires a family day care provider to carry a special home day care endorsement, but that they simply require homeowner and motor vehicle insurers to offer the respective minimum coverage. Because the coverage is not mandated, Allstate contends that there is no public policy against excluding from the coverage that is ⁷⁵⁶ offered normal and traditional exclusions, especially the motor vehicle exclusion, which, in light of § 19-106, can be covered under the motor vehicle policy.

The legislative purpose of § 19-202, it urges, was not to increase the number of registered day care providers or to provide pools of compensation for parents, but simply to make liability insurance available and affordable to persons who run day care centers from their homes. The issue is one of statutory construction, the rules for which are well-settled. Our goal is to ascertain and implement, to the extent possible, the legislative intent. To do that, we turn first to the language of the statute itself.

If, and only if, it proves impossible to determine what the Legislature intended with respect to the question before us from the language alone, we turn to other indicia that have proved useful in discerning that intent. See Caffrey v. Liquor Control, 3 70 Md. 272, 291-92 , 805 A.2d 268, 279 (2002); Chen v. State, 370 Md. 99, 106 , 803 A.2d 518, 521-22 (2002); Witte v. Azarian, 369 Md. 518, 525-26 , 801 A.2d 160, 165 (2002). Section 19-202, though mandating that homeowner insurers offer coverage “for liability that results