Himelstein v. Arrow Cab

GARRITY, Judge (retired), Specially Assigned. This matter involves the payment of a default judgment through a garnishee, the Motor Vehicle Administration ⁵³² (MVA), which held a security letter of credit posted on behalf of an unincorporated taxicab association for the purpose of participating in the Maryland Self-Insurance Program. We are asked to determine whether the security interest posted by the association is an asset held by the MVA that may be garnished to satisfy the liability of the unincorporated association — trading as Arrow Cab — as an entity, or whether the security is an asset of individual taxicab owners who are members of the association. We shall reverse the judgment of the Circuit Court for Baltimore City and hold that the security interest held by the MVA is an asset subject to garnishment in satisfaction of a judgment against Arrow Cab, the self-insured association, rather than of individual cab owners who are members of the association.

FACTUAL BACKGROUND While riding as a passenger in a taxi marked “Arrow Cab No. 23,” appellant, Michelle Himelstein, was injured when the driver ran into a curb while making a turn. Arrow Cab participates in Maryland’s Self-Insurance Program. This program allows an entity operating twenty-six or more vehicles to post a security bond or letter of credit instead of requiring the entity to purchase individual liability coverage for each vehicle. Taxicab companies with fewer than twenty-six vehicles may join other taxicab companies and form an association to reach the requisite number of cabs.

Although David Granat, as president of Arrow Cab, was duly served with process, Arrow Cab failed to file an answer contesting the complaint or to appear for trial held on April 18, 1994. A default judgment was entered against Arrow Cab for $19,878.09. In satisfaction of the judgment, appellant filed a Writ of Garnishment to Garnishee the MVA, which was issued by the Circuit Court for Baltimore City on July 19, 1994. In its Answer of Garnishee, the MVA admitted that it was in possession of Arrow Cab assets in the form of a $100,000 letter of credit.

On August 25, 1994, intervenors (GNG Cars, International, Inc., New Pikesville Cab, Inc., and individual owners trading as Arrow Cab) filed a Motion to ⁵³³ Intervene in the garnishment proceedings. The thrust of intervenors’ motion was that the letter of credit had been posted on behalf of the named intervenors only rather than on behalf of Arrow Cab. On December 13, 1995, trial commenced to determine whether the letter of credit/security posted by the garnishee was an asset of Arrow Cab that could be garnished to satisfy the default judgment. Mr. Raymond Leard, manager of the self-insurance program of the MVA, testified on behalf of the appellant that the program, inaugurated in 1946, was designed to allow qualified entities such as C & P Telephone, Baltimore Gas and Electric, municipalities, and fleet owners of at least 26 vehicles to be self-insured.

As the program progressed, an exception was made to allow individual owners or lessees of taxicabs to form an association comprising a pool of at least 26 vehicles. Such an association, operating under the aegis of a trade name, could be granted a Certificate of Self-Insurance (Arrow Cab certificate # 92) by the MVA upon submission of an appropriate bond assuring liability coverage. Thus, “Arrow Cab,” in essence, acted as an “insurance company” covering all vehicles listed in its application. In addition, Mr. Leard related that the MVA monitors the assets of all members of this type of an association to assure that “there are proper assets within the entities that have applied for self-insurance.... ” These additional assets, however, are not held or controlled by the MVA as security.

The actual bond submitted by the Arrow Cab association was in the form of a $100,000 irrevocable letter of credit from Maryland National Bank. Mr. Leard further testified that the letters and application for the Certificate of Self-Insurance sent to the MVA had been submitted under the letterhead “Arrow Cab ... and signed by David H. Granat, President.” Upon review of the statute and regulations governing the group of companies that had banded together under the trade name Arrow Cab, the court stated that it could find nothing that says that that entity, in effect, by participating in the Program, is agreeing, irrespective of the legal ⁵³⁴ liability of any of the members of the group or association for the claim being sought to be satisfied, in effect, to be responsible for any and all claims____ [B]ut there is nothing before me to suggest that Arrow Cab, as such an entity, in fact, has assets being held by the garnishee to satisfy plaintiffs judgment____ There is no evidence that it is a person who holds assets. It is, in effect, a trade name, an association of individuals who may be persons, corporations, all matters of other legally recognized persons.... In this case, it is the, in some sense, sad but true fact that of the possible parties who might have been proven to be liable in this case.

And by those, I mean, as we have discussed at various points, either the operator of the vehicle, Mr. Stafford, who, as I noted, was dismissed from the case on a statute of limitations defense; the owner of the vehicle, G & G Cars International, Inc., which was dismissed from the case on the basis of statute of limitations; Jane T. Gensler, Inc., who has been represented as the permit holder, was likewise dismissed on a statute of limitations basis; and Taxi Leasing, Inc., was dismissed on a statute of limitations basis. There is no judgment against any of those persons, entities, corporations in this case. All of them have been, in effect, knocked out of the case, if you will, for the various reasons indicated. If a particular owner of a vehicle was found to be not legally responsible with reference to a particular accident or incident, it would be appropriate to remove any claim directed toward the owner from the calculation of reserves.

So the difficulty is that, in effect, though Arrow Cab may be an entity, which is an association, it, in my view, is not an ⁵³⁵ entity for which the MVA holds any assets, which are subject to garnishment to satisfy the plaintiffs judgment. Consequently, the writ of garnishment against the MVA should be and is hereby dismissed.... In essence, the trial court granted Arrow Cab’s motion for judgment and quashed the writ of garnishment by determining that the assets posted with the MVA were not assets of Arrow Cab, as a whole, but rather assets of an unincorporated group of individuals, persons, and corporations who had banded together under the trade name Arrow Cab. Thus, as those parties were deemed no longer subject to liability, having been dismissed due to the statute of limitations for the most part, the posted security interest could not be used to satisfy the judgment against Arrow Cab.

CONTENTIONS The thrust of appellant’s contention is that the self-insurance bond of an unincorporated taxicab association is an asset that may be used to satisfy its debts. In this manner, the security bond that was posted as a prerequisite to obtain a Certificate of Self-Insurance by the members of the association trading as Arrow Cab is analogous to a bond that would be posted by an owner of a large fleet of vehicles to qualify for self-insurance status and to guarantee payment of judgment against the entity. On the other hand, the intervenor appellees argue that the Certificate of Self-insurance and the letter of credit were issued in the names of G & G Cars International, Inc., Individual owners t/a Arrow Cab, and New Pikesville, Inc. As these companies are the “record owners of the letter of credit posted to MVA for their self-insurance,” no security interest was posted on behalf of “any association.” STANDARD OF REVIEW Maryland Rule 8-131(c) provides: ⁵³⁶ Action Tried Without a Jury. — When an action has been tried without a jury, the appellate court will review the case on both the law and the evidence. It will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the