Kee v. State Highway Administration

ELDRIDGE, Judge. This case involves a question of coverage under the Maryland Tort Claims Act, Maryland Code (1984, 1987 Cum. Supp.), § 12-101 through § 12-110 of the State Government Article, formerly codified in Code (1974, 1980 Repl.Vol., 1983 Cum.Supp.), § 5-401 through § 5-408 of the Courts and Judicial Proceedings Article. 1 I. Before setting forth the facts of the case and the parties’ contentions, we briefly review the relevant statutory provisions and legislative background. Effective July 1, 1982, the General Assembly enacted the Maryland Tort Claims Act, waiving the tort immunity of the State under specified conditions.

Ch. 298 of the Acts of 1981, Code (1980 Repl.Vol., 1983 Cum.Supp.), §§ 5-401 through 5-408 of the Courts and Judicial Proceedings Article. Section 5-403 of the Courts and Judicial Proceedings Article set forth the scope of the waiver. Subsection (a) of that section provided as follows: “(a) Actions in which State’s immunity is waived.—Except as provided in subsection (b) of this section, the immunity of the State from suit in the courts of this State and liability in tort is waived in the following actions to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer pursuant to § 27 of Article 95. ⁴⁴⁹ (1) An action to recover damages caused by the negligent maintenance or operation of a motor vehicle by a State employee; (2) An action to recover damages caused by the negligence of a health care employee of a State facility or institution or by a doctor, nurse, dentist, or related health care personnel employed by the State; (3) An action to recover damages caused by the patently dangerous condition of a building, structure, or other public improvement owned and controlled by the State; (4) An action to recover damages caused by the negligent use or maintenance of State property by a State employee; (5) an action to recover damages caused by a defective, unsafe, or dangerous condition of any street, alley, sidewalk, or highway owned and controlled by the State if constructive or actual notice of the condition existed; and (6) An action to recover damages caused by the negligent failure of a State employee to properly supervise an activity at a State park or recreation facility.” As the introductory language in subsection (a) makes clear, the General Assembly waived the State’s immunity only “to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer pursuant to § 27 of Article 95.” Code (1979 Repl.Vol., 1984 Cum.Supp.), Art. 95, § 27(d), provided that “[t]o the extent that funds are available in the budget, the Treasurer shall provide self-insurance or purchased insurance or a combination of [both] ... sufficient to cover the liability of the State and its employees under Subtitle 4 of Title 5 of the Courts Article of this Code.” For the first year of the Tort Claims Act, the fiscal year beginning July 1, 1982, and ending June 30, 1983, the General Assembly appropriated $2,836,500 to the State Treasurer for the purchase of insurance generally. The budget bill, as submitted by the Governor and as enacted by the General Assembly, stated (Ch. 125 of the Acts of 1982, at 1383): ⁴⁵⁰ “not more than $1,000,000 of this appropriation shall be utilized to purchase commercial insurance for the purpose of a limited waiver of sovereign immunity for tort claims under the provisions of section 5-403(a)(3)(4) of the Courts and Judicial Proceedings Article ... and that no other portion of this appropriation may be expended for insurance under Section 27(d) of Article 95.” Thus the Treasurer had $1,000,000 with which to purchase an insurance policy covering claims made under paragraphs (3) and (4) of § 5-403(a). 2 Using this appropriation, the State Treasurer purchased an insurance policy with Reliance of Illinois for $613,951.

In accordance with the statutory authorization, the policy apparently covered only claims made, under paragraphs (3) and (4) of § 5-403(a). 3 The policy was in effect from July 1, 1982, through November 1, 1983, covering occurrences within that period. In subsequent fiscal years, the General Assembly appropriated funds for the purchase of commercial insurance for the Tort Claims Act generally, and did not limit the authorization to any particular categories of actions for which ⁴⁵¹ immunity was waived. 4 Moreover, by Ch. 538 of the Acts of 1985, the General Assembly repealed the provisions listing specified categories for which immunity was waived and adopted entirely different language describing the scope of the immunity waiver. See Clea v. City of Baltimore, 312 Md. 662 , 671 n. 6, 541 A.2d 1303 , 1307 n. 6 (1988). In 1985, the General Assembly authorized payment of claims not covered by commercial insurance from the State Insurance Trust Fund (self-insurance), and appropriated funds for that purpose.

See Ch. 538 of the Acts of 1985, at 2685; Ch. 109 of the Acts of 1986, at 360. 5 These provisions became effective July 1, 1985, and on July 17, 1985, the Treasurer promulgated an emergency regulation authorizing payment of claims from the self-insurance fund. See COMAR 25.02.01.01 (1986). 6 II. Turning to the facts of the instant case, Mark Schaffert was driving an automobile, in which Gary Schaffert was a passenger, on the Old National Pike highway in Frederick County, Maryland, on September 24, 1982. Mark Schaffert swerved to avoid another vehicle, went through a guardrail, and slid down an embankment.

The accident resulted in the ⁴⁵² death of Mark Schaffert and in serious injury to Gary Schaffert. Gary Schaffert and Evelyn Kee, the mother of Mark and Gary Schaffert, in her own capacity and as personal representative of Mark Schaffert’s estate, sought to recover for these injuries from the State under the recently enacted Maryland Tort Claims Act. In accordance with the provisions of the Tort Claims Act, they initially presented their claim for damages to the State Treasurer. See § 5-406.

Their claim alleged that the injuries occurred as a result of a negligently maintained guardrail that could not withstand the impact of the vehicle, thus allowing the vehicle to flip over and slide down the embankment. The claim also alleged that the State had knowledge of the guardrail’s dangerous condition. On August 21, 1985, the Treasurer denied the claim, concluding that the State had not waived its immunity under the Tort Claims Act for this type of claim in 1982. On September 25, 1985, Gary Schaffert and Evelyn Kee filed the present action in the Circuit Court for Frederick County.

The State Highway Administration, the State of Maryland, and a third party, Green Acres, Inc., were named as defendants. The complaint set out the detailed facts of the accident, the allegations concerning the negligent maintenance of the guardrail by the State Highway Administration, and the fact that their claim had been presented to and denied by the State Treasurer. The complaint made no reference to any particular paragraphs of § 5-403(a) or any of the waiver categories listed in that section. In January 1986, the state defendants filed a motion for summary judgment contending that both the State and the State Highway Administration retained their immunity from suit because the State was not covered by a program of insurance for this type of accident.

The state defendants asserted that the plaintiffs’ claim fell within paragraph (5) of § 5-403(a), relating to damages caused by a defective, unsafe, or dangerous condition of a state highway. The ⁴⁵³ state defendants then pointed out that in 1982, pursuant to legislative directive, insurance coverage had only been purchased to cover claims made under paragraphs (3) and (4) of § 5-403(a). Attached to the motion for summary judgment was a brief affidavit by the “Insurance Manager for the State Treasurer,” stating that there was no insurance “to cover an action to recover damages caused by a defective, unsafe, or dangerous conditions of any street, alley, sidewalk or highway owned and controlled by the State between July 1, 1982 and November 1, 1983.” The circuit court granted the state defendants’ motion for summary judgment, thereby purporting to dispose of the claim against the state defendants. The court’s order did not, however, dispose of the claim against Green Acres, Inc., nor did the court certify the judgment in favor of the state defendants as final pursuant to Maryland Rule 2-602. 7 The plaintiffs appealed the circuit court’s decision to the Court of Special Appeals.

See Kee et al. v. State Highway Administration et al., 68 Md.App. 473 , 513 A.2d 930 (1986). The Court of Special Appeals appeared to accept the state defendants’ contention that the plaintiffs’ claim fell only within paragraph (5) of § 5-403(a), and the court pointed ⁴⁵⁴ out that the insurance policy in effect in 1982 excluded such a claim. Nevertheless, the intermediate appellate court reversed, holding that, under the statutory scheme, the State Treasurer had a duty to purchase insurance to cover all of the various categories under the Tort Claims Act, and that the Treasurer could not decide to insure certain causes of action to the exclusion of others. 68 Md.App. at 488-490 , 513 A.2d at 937-939 . Because, according to the Court of Special Appeals, the record did not indicate whether funds were available to purchase insurance to cover claims under paragraph (5) of § 5-403(a), and what the cost of this insurance would be, the court concluded that summary judgment was improper. 8 One week after the filing of the Court of Special Appeals’ opinion, the plaintiffs filed in the circuit court an amended complaint which, inter alia, expressly asserted that the action fell within paragraphs (3) and (4) of § 5-403(a).

The state defendants then filed in this Court a petition for a writ of certiorari, seeking review of the Court of Special Appeals’ decision. We granted the petition and issued a writ of certiorari. We did not, however, reach the merits of the case. Instead, we vacated the judgment of the Court of Special Appeals and remanded the case to that court with directions to dismiss the appeal for lack of a final trial court judgment.

State Highway Admin. v. Kee, 309 Md. 523, 529-530 , 525 A.2d 637, 640 (1987). We pointed out that, because the claim against Green Acres, Inc., had not been disposed of, and because the judgment for the state defendants had not been certified as final under Rule 2-602, no final circuit court judgment existed as to any of the defendants. Thereafter, the state defendants filed a motion in the circuit court for certification of a final judgment pursuant to Rule 2-602(b). At the same time, in a separate memorandum, the state defendants requested that the court strike ⁴⁵⁵ the plaintiffs’ amended complaint.

The request did not address the merits of the plaintiffs’ contentions regarding paragraphs (3) and (4) of § 5-403(a); instead, the state defendants took the position that the circuit court’s prior “entry of summary judgment on behalf of the state defendants ... is still valid, and plaintiffs’ amended complaint, which would bring the State back into a suit from which it has already been dismissed, should not be permitted.” The circuit court, without stating its reasons, entered an order granting the defendants’ motion for certification, certifying a final judgment in favor of the state defendants in accordance with Rule 2-602, and striking the amended complaint “against the” state defendants. Plaintiffs then appealed to the Court of Special Appeals. Before any further proceedings in the Court of Special Appeals, the state defendants petitioned this Court for a writ of certiorari. The plaintiffs filed a cross-petition for a writ of certiorari in which they specifically contended, inter alia, that their action fell within paragraphs (3) or (4) of § 5-403(a) of the Tort Claims Act.

We granted both petitions.

III

A waiver of sovereign or governmental immunity from suit generally requires that two conditions be met. First, the Legislature must authorize suits for damages, and second, there must be provision for the payment of judgments. See, generally, e.g., Md.-Nat’l Cap. P. & P. Comm’n v. Kranz, 308 Md. 618, 623-626 , 521 A.2d 729, 732-733 (1987); Jackson v. Housing Opp.

Comm’n, 289 Md. 118, 123 , 422 A.2d 376, 378-379 (1980); Katz v. Washington Sub. San. Comm’n, 284 Md. 503, 508-509 , 397 A.2d 1027, 1030 (1979); Board v. John K. Ruff, Inc., 278 Md. 580, 595 , 366 A.2d 360, 363 (1976); American Structures v. City of Balto., 278 Md. 356, 359 , 364 A.2d 55, 56-57 (1976), and cases there cited; Lohr v. River Commission, 180 Md. 584 , 26 A.2d 547 (1942); University of Maryland v. Maas, 173 Md. 554, 558-559 , 197 A. 123, 125 (1937); Fisher & ⁴⁵⁶ Carozza Co. v. Mackall, 138 Md. 586, 593-594 , 114 A. 580, 583 (1921); State v. Rich, 126 Md. 643, 646-648 , 95 A. 956, 957-958 (1915); Weddle v. School Commissioners, 94 Md. 334, 344-345 , 51 A. 289, 291 (1902). In the case at bar, the plaintiffs make two alternate arguments as to why there was a waiver of immunity with regard to their action.

The plaintiffs’ first argument assumes that para-‘ graph (5) of § 5-403(a) constitutes the sole basis for their action, and that the Reliance insurance policy in effect during 1982 excluded claims under paragraph (5). Nevertheless, the plaintiffs contend that whether the State had waived its immunity by providing for funds to pay claims should be judged by the funds available at the time of judgment rather than at the time the accident occurred. Consequently, the plaintiffs assert, the State’s self-insurance program, established in 1985, covers the accident, and therefore the action is not barred by sovereign immunity. The plaintiffs’ alternatively argue that their claim falls within either paragraph (3) or paragraph (4) of § 5-403(a).

They point out that both of these paragraphs embrace categories of claims covered by the Reliance insurance policy in effect during 1982. A. The plaintiffs’ first argument rests upon the premise that a consent to suit coupled with a provision for payment of claims is sufficient to waive the State’s immunity from tort suit even if, at the time the cause of action arose, funds were not yet available to pay the judgment. Under these circumstances, according to the plaintiffs, the waiver of immunity is sufficient as long as funds are appropriated and available by the time judgment is entered. As a general matter, and under statutory language different from that applicable to this case, there may be merit in this theory.

Nevertheless, under the circumstances here, the plaintiffs’ argument must be rejected. ⁴⁵⁷ In 1982, when the accident in this case