Government Employees Insurance v. Comer

⁹¹ JOHN C. ELDRIDGE (Retired, Specially Assigned), J. The issue in this declaratory judgment action concerns the coverage under the uninsured/underinsured motorist language of a motor vehicle insurance policy and the uninsured/underinsured motorist provisions of the Maryland Insurance Code. 1 I. Both parties have agreed upon the facts of the case as set forth in the brief of the appellant, Government Employees Insurance Company (hereafter referred to as “GEICO”). The following summary is based upon that agreed statement of facts. On September 10, 2005, Ray E. Comer, Jr. was riding on his 1998 Harley Davidson motorcycle westbound on Hallowing Point Road in Calvert County, Maryland. Patsy Lee Frey was traveling eastbound on Hallowing Point Road in a 1999 Ford sedan.

Ms. Frey failed to yield the right of way to Mr. Comer and turned left in front of him onto northbound North Prince Frederick Boulevard. A collision occurred between Ms. Frey’s Ford sedan and Mr. Comer’s motorcycle. Ray Comer, Jr. sustained serious injuries as a result of this ⁹² collision, and his medical expenses alone exceeded $200,000. Many of Mr. Comer’s injuries are permanent in nature.

Ray Comer’s Harley-Davidson motorcycle was insured by a motor vehicle insurance policy issued by Progressive Insurance Co. The Progressive insurance policy carried uninsured/underinsured motorist limits in the amount of $50,000 per person. At the time of the accident, Ray E. Comer, Jr. resided in his father’s home in Anne Arundel County, Maryland. His father, Ray E. Comer, Sr. owned a 2000 Buick automobile and a 1992 Chevrolet automobile, both of which were insured under a GEICO Family Automobile Insurance Policy. This policy carried single limit uninsured/ underinsured motorist coverage in the amount of $800,000.

In light of his residence, Ray E. Comer, Jr. qualified as an “insured” under the GEICO policy. Ms. Frey’s automobile was insured by a policy issued by the Erie Insurance Company. The Erie policy had a maximum liability coverage of $100,000, and Erie Insurance Company tendered the $100,000 policy limits to Ray Comer, Jr. After accepting the $100,000 liability insurance payment from Ms. Frey’s carrier, Ray Comer, Jr. also presented claims to his insurance carrier, Progressive, and to his father’s carrier, GEICO, for underinsured motorist benefits. Progressive denied Mr. Comer’s claim for underinsured motorist benefits, as the maximum uninsured/underinsured coverage under the Progressive policy was $50,000, and Ray Comer, Jr. was not eligible for any more benefits from Progressive because he had received $100,000 from the liability carrier. 2 ⁹³ GEICO also denied Ray Comer, Jr.’s claim because, in GEICO’s view, he did not qualify for coverage under the GEICO policy.

The denial of coverage was based on GEICO’s determination that, at the time of the accident, Ray Comer, Jr. was occupying a motor vehicle owned by an insured (ie., the motorcycle) which was not covered by the GEICO policy. The exclusion in the uninsured/underinsured portion of the GEICO insurance policy which was relied upon by GEICO was as follows (emphasis in original): “EXCLUSIONS 4. Bodily Injury sustained by an insured while occupying a motor vehicle owned by an insured and not described in the declarations and not covered by the bodily injury and property damage liability coverages of this policy is not covered.” Ray Comer, Jr. filed in the Circuit Court for Anne Arundel County, against GEICO, a complaint for a declaratory judgment, requesting a declaration that he was entitled to receive uninsured/underinsured motorist benefits under the GEICO insurance policy. Both sides filed motions for summary judgment along with legal memoranda.

In support of his motion for summary judgment, the plaintiff Comer argued that the language of the GEICO insurance policy provided him with underinsured motorist benefits under the circumstances of this case. He primarily relied upon the basic coverage language of the uninsured/underinsured motorist section of the policy, which states in relevant part as follows (emphasis in original): “LOSSES WE PAY We will pay damages for bodily injury and property damaye caused by an accident which the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle arising out of the ownership, maintenance or use of that vehicle.” ⁹⁴ The plaintiff also relied on the following provision in the uninsured/underinsured motorist section, of the GEICO policy (emphasis in original): “OTHER INSURANCE-BODILY INJURY When an insured occupies an auto or other motor vehicle not described in this policy, this insurance is excess over any other similar insurance available to the insured. The insurance which applies to the occupied auto or other motor vehicle is primary.” With regard to the policy exclusion relied upon by GEICO, the plaintiff argued that “the exclusion is ambiguous and therefore to be construed against the insurer” which drafted the policy. Alternatively, the plaintiff maintained that the exclusion was invalid because it was “not expressly authorized by the Legislature.” GEICO, in the memorandum supporting its motion for summary judgment, relied upon the previously quoted exclusion number 4, which excluded from uninsured/underinsured motorist coverage bodily injury sustained by an insured while occupying a vehicle owned by an insured and not described in the declarations and not covered by the liability coverage of the policy.

GEICO argued that the exclusion is clear and that it is valid under the Maryland Insurance Code. Following oral argument, the Circuit Court filed a declaratory judgment declaring, inter alia, that the GEICO policy “provides coverage to Plaintiff for losses sustained in his September 10, 2005, motor vehicle accident,” that “[tjhere is no applicable exclusion in the Policy precluding that coverage,” and that the “coverage provided to Plaintiff under the Policy is limited to $300,000 and is secondary to the coverage provided by the at-fault driver’s insurance policy issued by Erie Insurance Co.” In a written opinion accompanying the declaratory judgment, the Circuit Court relied upon the same two provisions that were relied on by the plaintiff. As to the exclusion invoked by GEICO, the court concluded: “Finally, because GEICO’s interpretation of its Policy creates an ambi ⁹⁵ guity with regard to the scope of its coverage, that ambiguity must be construed against it as the drafting party.” GEICO filed a notice of appeal to the Court of Special Appeals, and this Court issued a writ of certiorari prior to argument in the Court of Special Appeals. GEICO v. Comer, 404 Md. 658 , 948 A.2d 70 (2008).

II

The parties’ arguments in this Court are essentially the same as their arguments in the Circuit Court. GEICO contends that the uninsured/underinsured provisions of its policy are unambiguous, that exclusion number 4 is clearly applicable and authorizes the denial of Roy Comer, Jr.’s claim, and that the exclusion is valid under the Maryland Insurance Code. Comer argued that the coverage provisions of the GEICO policy entitle him to underinsured motorist benefits under that policy. He specifically relies upon the previously quoted basic coverage language of the uninsured/underinsured motorist portion of the GEICO policy and the provision in the policy specifying which coverage is primary when an insured under the GEICO policy is occupying a vehicle insured under a different insurance policy.

As to exclusion number 4, Comer maintains that it is not authorized by the uninsured/underinsured statutory provisions, and, consequently, it is invalid. Comer’s and the Circuit Court’s reliance upon the basic uninsured/underinsured coverage provision, and the paragraph dealing with primary/excess insurance, is misplaced. These two provisions, standing alone, may well indicate excess coverage for Comer under the GEICO policy. The two provisions, however, do not stand alone.

The nature of an exclusion, dealing with a more specific circumstance, is to modify, or create an exception to, the broader coverage provisions. If the two coverage provisions of the GEICO policy did not arguably cover Comer’s claim, there would be no need to consider any exclusions. A case very much on point is Liberty Mutual Insurance v. State Farm, 262 Md. 305 , 277 A.2d 603 (1971). That case was ⁹⁶ a declaratory judgment action to determine whether an automobile accident was covered by a motor vehicle insurance policy issued by Liberty Mutual Insurance Co. The Circuit Court in the Liberty Mutual case, like the Circuit Court in the present action, held that the accident was covered by a paragraph in the definitions section of the policy, and that an exclusion in another part of the policy could not remove coverage.

This Court, in reversing the declaratory judgment and holding that there was no coverage, explained ( 262 Md. at 312 , 277 A.2d at 607 ): “The lower court was of the opinion that the definitions in paragraph 6 ... did modify or make ambiguous the provisions of the paragraph 8 exclusion.... The lower court ... concluded that Liberty Mutual could not confer coverage in one part of the policy and take it away at another part of the policy. We do not concur in this conclusion, however, inasmuch [as] (1) almost all liability policies do just that by conferring broad coverage in the first part of the policy only to narrow that broad coverage by exclusions, conditions, etc., later in the policy and (2) we find no conflict between the provisions of paragraphs 6 and 8, as properly construed.” Turning to exclusion number 4 in the case at bar, the provision excludes from uninsured/underinsured motorist coverage bodily