Macedo v. Automobile Insurance Co.

Pedro Steven Buarque de Macedo, et al. v. The Automobile Insurance Company of Hartford, Connecticut, No. 52, September Term, 2021. Opinion by Biran, J. INSURANCE – MOTOR VEHICLE INSURANCE LAW – HOUSEHOLD EXCLUSIONS – Section 5-806(b) of the Courts and Judicial Proceedings Article of the Maryland Code provides that the right of action by an unemancipated child against a parent (or vice versa) “may not be restricted by the doctrine of parent-child immunity or by any insurance policy provisions, up to the limits of motor vehicle liability coverage or uninsured motor vehicle coverage.” The Court of Appeals held that the phrase “motor vehicle liability coverage” in this statute refers to coverage under a primary motor vehicle liability policy, not to coverage under a personal umbrella insurance policy. A household exclusion in a personal umbrella policy therefore is not void as contrary to statute. Circuit Court for Montgomery County Case No.: 463245V Argued: May 10, 2022 IN THE COURT OF APPEALS OF MARYLAND No. 52 September Term, 2021 PEDRO STEVEN BUARQUE DE MACEDO, ET AL. v. THE AUTOMOBILE INSURANCE COMPANY OF HARTFORD, CONNECTICUT Watts Hotten Booth Biran Eaves Adkins, Sally D.

(Senior Judge, Specially Assigned) Getty, Joseph M. (Senior Judge, Specially Assigned), JJ. Opinion by Biran, J. Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2022-08-11 10:32-04:00 Filed: August 11, 2022 Suzanne C. Johnson, Clerk This case arises from a tragic automobile accident. In February 2016, Michael Buarque de Macedo, his spouse Alessandra Buarque de Macedo, and one of their children, Thomas Buarque de Macedo, died in a two-car collision in Montgomery County, Maryland.

Their remaining child, Helena Buarque de Macedo,1 survived the crash but suffered permanent injuries. Because the family members have the same surname, we may at times refer to these and other members of the extended Macedo family by their first names. In doing so, we mean no disrespect. Michael was driving one of the family vehicles when the accident occurred.

He and Alessandra were the named insureds of a primary automobile liability insurance policy issued by The Travelers Indemnity Company (“TIC”). Michael alone was also the named insured of a personal liability umbrella policy issued by The Automobile Insurance Company of Hartford, Connecticut (“AIC”), the Respondent here. The umbrella policy contained a household exclusion provision that purported to preclude coverage for bodily injury or personal injury suffered by Michael or by individuals who were related to Michael and who resided in Michael’s household. The Petitioners before us are Helena, individually, and Steven Macedo, in his capacity as Helena’s guardian and the Personal Representative of the Estates of Thomas and Alessandra.

Steven and Helena (collectively, “the Macedos”) filed a civil action in the 1 The full names of the members of the family at issue in this case include “Buarque de Macedo.” In the text of the Complaint that counsel for the plaintiffs filed in the circuit court, counsel referred to members of the family by their first names followed by “Macedo” (e.g., “Steven Macedo”). From this point forward, when referring to the family’s surname, we will do the same. Circuit Court for Montgomery County asserting negligence, wrongful death, and survivorship claims against Michael’s Estate and the State of Maryland (Counts I-VII). Count VIII of the Complaint sought a declaratory judgment that the provisions in Michael’s umbrella policy that purport to exclude claims brought against the named insured by members of the same household are void as against public policy and contrary to statute, to the extent the exclusion would otherwise apply to claims brought on behalf of Thomas’s Estate and Helena.

After a hearing on the Macedos’ and Travelers’ cross-motions for summary judgment, the circuit court declared the household exclusion valid and enforceable. The circuit court entered a final judgment as to Count VIII and ordered Counts I-VII stayed until the coverage dispute in Count VIII is resolved on appeal. The Court of Special Appeals affirmed the judgment of the circuit court, and the Macedos sought further review in this Court. For the reasons stated below, we will affirm the judgment of the Court of Special Appeals.

I Background A. The Automobile Accident On February 27, 2016, at approximately 6:55 p.m., Michael, Alessandra, and their two children, Thomas (18) and Helena (15), were involved in a devastating automobile accident while on their way to Walt Whitman High School in Bethesda, Maryland, to drop Helena off at a school play. Michael was driving one of the family cars, a Chevrolet Volt. A BMW sedan traveling at a very high rate of speed collided with the Volt as Michael attempted to make a left turn. Only Helena survived.

She was transported from the scene 2 to the hospital where she underwent numerous emergency life-saving procedures. Helena sustained serious and permanent injuries as a result of the accident. B. The Insurance Policies At the time of the accident, Michael and Alessandra were the named insureds of an automobile liability policy issued by TIC. Under this primary policy, the limit of liability coverage for bodily injury and property damage was $500,000 per accident.

Additionally, Michael was the named insured of a “Personal Liability Umbrella Policy of Security” issued by AIC. TIC and AIC are both Travelers Property Casualty Companies. From this point forward, for the sake of simplicity, we will refer to both companies, individually and collectively, as “Travelers.” Under the umbrella policy, the limit of liability coverage was $2,000,000 per occurrence, as long as a primary automobile policy with limits of $500,000 per occurrence was in force. The umbrella policy also contained a household exclusion provision, stating that the policy did not apply to “bodily injury or personal injury to any person who is related by blood, marriage, or adoption to an insured and who is a resident of the household of that person; or bodily injury or personal injury to [the insured].” (Internal quotation marks omitted.) Following the accident, Steven Macedo was named Helena’s guardian and the Personal Representative of Alessandra’s and Thomas’s Estates.

On October 12, 2016, counsel for Steven Macedo and Helena wrote to Travelers and demanded $500,000 under the primary policy and $2,000,000 under the umbrella policy to settle the Macedos’ various survivorship, personal injury, and wrongful death claims. 3 In response to the Macedos’ demand, Travelers acknowledged its obligation to pay $500,000 under the primary auto policy. However, Travelers asserted that the household exclusion applied under the umbrella policy: “Since Michael is the Named Insured and ‘insured’ under the Umbrella Policy and Alessandra, Thomas, and Helena were related by blood or marriage … and were residents of Michael’s household, the household exclusion applies to preclude coverage for any and all claims made by Alessandra, Thomas, and/or Helena against Michael.” The Macedos and Travelers entered into a settlement agreement on June 16, 2017, under which Travelers agreed to pay the $500,000 policy limit under the primary auto policy. The Macedos reserved their rights to make a claim under the umbrella policy. C. The Circuit Court’s Ruling On February 13, 2019, the Macedos filed a civil action in the Circuit Court for Montgomery County.

Counts I-VII of the complaint asserted negligence, wrongful death, and survivorship claims against Michael’s Estate and the State of Maryland. Count VIII of the complaint sought a declaratory judgment against Travelers that the household exclusion in the umbrella policy was void as against public policy and contrary to statute to the extent it would otherwise apply to claims brought by the Macedos against Michael. The Macedos and Travelers filed cross-motions for summary judgment as to Count VIII of the Complaint. The Macedos contended that the plain language of Maryland Code, Courts and Judicial Proceedings Article (“CJP”) (2020 Repl.

Vol.) § 5-806(b) renders void a household exclusion in an umbrella policy, up to the limits of the motor vehicle coverage 4 of the umbrella policy, as to personal injury and wrongful death claims made by unemancipated children or the estates of unemancipated children against their parents. Section 5-806(b) provides: The right of action by a parent or the estate of a parent against a child of the parent, or by a child or the estate of a child against a parent of the child, for wrongful death, personal injury, or property damage arising out of the operation of a motor vehicle, as defined in Title 11 of the Transportation Article, may not be restricted by the doctrine of parent-child immunity or by any insurance policy provisions, up to the limits of motor vehicle liability coverage or uninsured motor vehicle coverage. Following a hearing on August 2, 2019, the circuit court denied the Macedos’ motion for summary judgment, declared the household exclusion in the umbrella policy “valid and enforceable,” and therefore granted Travelers’ motion for summary judgment. By Order entered October 1, 2019, the circuit court granted the Macedos’ consent motion for an order directing the entry of final judgment on Count VIII and staying Counts I-VII “until the coverage dispute set forth in Count VIII is resolved in Maryland’s appellate courts[.]” D. Appeal On appeal, the Macedos renewed their argument that the plain language of CJP § 5-806 renders void a household exclusion in an umbrella policy, up to the limits of the motor vehicle coverage of the umbrella policy, with respect to personal injury and wrongful death claims made by unemancipated children or the estates of unemancipated children against their parents.

The intermediate appellate court disagreed with the Macedos’ interpretation of CJP § 5-806(b). The court opined that the statute “is ambiguous when read in isolation. 5 However, when the statute is considered in the context of the statutory scheme of which it is a part, its meaning becomes clear – the phrase ‘motor vehicle liability coverage’ refers to a primary motor vehicle liability policy and not to an umbrella policy.” Macedo v. Automobile Ins. Co. of Hartford, Connecticut, No. 1619, Sept. Term 2019, 2021 WL 4453477 , at ¹¹ (Md. Ct. Spec. App. Sept. 29, 2021).

The Macedos filed a petition for writ of certiorari in this Court, seeking review of the following question: “Does [CJP] § 5-806 render the household exclusion clause in an umbrella policy void, up to the limits of motor vehicle liability coverage, as to motor vehicle personal injury or wrongful death claims of unemancipated children or estates of such children against their parent?” On January 11, 2022, we granted the petition. Macedo v. Automobile Ins. Co. of Hartford, Connecticut, 477 Md. 148 (2022). II Discussion “The question of whether a trial court’s grant of summary judgment was proper is a question of law subject to de novo review on appeal.” Rossello v. Zurich Am.

Ins. Co., 468 Md. 92, 102 (2020) (internal quotation marks and citations omitted). “In reviewing a grant of summary judgment under Md. Rule 2-501, we independently review the record to determine whether the parties properly generated a dispute of material fact and, if not, whether the moving party is entitled to judgment as a matter of law.” Id. at 102-03 (internal quotation marks and citation omitted). There are no material disputes of fact at this stage of the case. Instead, resolution of this appeal depends entirely on the proper interpretation of CJP § 5-806, a question of law 6 that we review de novo.

See Pabst Brewing Co. v. Frederick P. Winner, Ltd., 478 Md. 61, 74-75 (2022). A. Relevant Provisions in the Insurance Article The General Assembly has legislated comprehensive and detailed regulations relating to motor vehicle liability insurance, which are set forth in the Insurance Article. As we shall see, several provisions of the Insurance Article are relevant to the interpretation of CJP § 5-806(b). The Insurance Article addresses motor vehicle liability coverage, uninsured motor vehicle coverage, and other primary-layer coverages in Title 19, Subtitle 5, “Motor Vehicle Insurance – Primary Coverage.” Md. Code Ann., Ins.

(“IN”) (2017 Repl. Vol.) §§ 19-501 - 19-520. Nothing in this primary coverage subtitle substantively addresses tort liability. See id. § 19-502(d) (“This subtitle does not affect the right of a person to claim and sue for damages or losses that the person sustains as the result of a motor vehicle accident.”).

What Subtitle 5 does do is set forth mandatory coverages that an insurer must include in a “motor vehicle liability insurance policy,” as well as optional coverages that the insured may decline. These mandatory and optional coverages include: mandatory motor vehicle liability coverage, id. § 19-504; optional no-fault personal injury protection coverage, id. § 19-505; mandatory uninsured motorist (“UM”) coverage, id. § 19-509; optional first-party collision coverage, id. § 19-512; and, beginning in 2017, optional enhanced underinsured motorist coverage, id. § 19-509.1. Section 19-504 specifically addresses “minimum liability coverage”: “Each motor vehicle liability insurance policy issued, sold, or delivered in the State shall provide the 7 minimum liability coverage specified in Title 17 of the Transportation Article.” Title 17 of the Transportation Article, in turn, provides that the “owner of a motor vehicle that is required to be registered in this State shall maintain the required security for the vehicle during the registration period.” Md. Code, Transp. (“TR”) (2020 Repl.

Vol.) § 17-104(b). That “form of security … is a vehicle liability insurance policy written by an insurer authorized to write these policies in this State.” Id. § 17-103(a)(1). The policy must “provide for at least”: (1) The payment of claims for bodily injury or death arising from an accident of up to $30,000 for any one person and up to $60,000 for any two or more persons, in addition to interest and costs; (2) The payment of claims for property of others damaged or destroyed in an accident of up to $15,000, in addition to interest and costs; (3) Unless waived, … the benefits described under § 19-505 of the Insurance Article as to basic required primary coverage; [and] (4) The benefits required under § 19-509 or § 19-509.1 of the Insurance Article as to required additional coverage[.] Id. § 17-103(b). The first two subsections comprise the “minimum liability coverage” mandated by IN § 19-504.

The third subsection refers to the waivable no-fault coverage (IN § 19-505). The fourth subsection refers to mandatory UM coverage and optional enhanced underinsured motorist coverage (IN §§ 19-509 and 19-509.1, respectively). Parties may contract for primary liability or UM policy limits that are above the statutorily required minimum amounts. IN § 19-502(b) (“Neither this subtitle nor Title 17 of the Transportation Article prevents an insurer from issuing, selling, or delivering motor vehicle liability insurance policies that provide liability coverage in excess of the requirements of the Maryland Vehicle Law.”).

Subtitle 5 imposes two requirements on “liability coverage under a policy or binder of private passenger motor vehicle liability 8 insurance [that] exceeds the amount required under [TR] § 17-103.” IN §§ 19-504(a) & 19-510(a)(1). First, the insurer “shall provide uninsured motorist coverage in an amount equal to the amount of the liability coverage,” unless the first named insured waives the increased UM limit. Id. § 19-510(b). Second, the insurer “shall offer … coverage for claims made by a family member in the same amount as the liability coverage.” Id. § 19-504.1(b).

This means that, when a policy of “private passenger motor vehicle liability insurance” provides liability coverage above statutory minimums, the first named insured decides whether the UM limits will equal the increased liability coverage limits and whether the increased liability coverage (and, if accepted, the increased UM limits) will apply to family members’ tort claims. The Insurance Article contemplates the possibility of an umbrella policy providing optional UM coverage: “A policy that, as its primary purpose, provides coverage in excess of other valid and collectible insurance or qualified self-insurance may include the [UM] coverage provided for in this section.” IN § 19-509(h)(1). No provision in Subtitle 5 mandates UM coverage or other coverage under umbrella policies. B. The Stickley Decision In Stickley v. State Farm Fire and Casualty Company, 431 Md. 347 (2013), this Court interpreted the phrase “motor vehicle liability insurance” as used in IN § 19-504.1, and specifically considered whether an umbrella policy constitutes such “motor vehicle liability insurance.” The Court answered that question in the negative.

The plaintiff in Stickley was a passenger in a motor vehicle driven by her husband. Stickley, 431 Md. at 350 . The Stickleys were involved in an accident in which Mr. Stickley 9 was killed, and Mrs. Stickley was seriously injured. Id. at 350, 352 .

The Stickleys had a motor vehicle liability policy with coverage limits of $100,000 per person and $300,000 per accident with State Farm Auto. Id. at 352 . Additionally, they had a Personal Liability Umbrella Policy with personal liability and uninsured motorist coverage of $2,000,000 issued by another State Farm affiliate. See id.

As here, the umbrella policy contained a household exclusion. See id. at 352-53 . After the accident, Mrs. Stickley filed claims under both policies. Id. at 353-54 .

State Farm offered Mrs. Stickley the full $100,000 in liability coverage provided under the primary policy, but denied Mrs. Stickley’s claim for bodily injury under the umbrella policy, citing the household exclusion. Id. at 353 . Mrs. Stickley filed a complaint seeking a declaration that the umbrella policy’s household exclusion violated IN § 19-504.1. Id.

She argued that the umbrella policy was “private passenger motor vehicle liability insurance,” and that State Farm therefore was required under IN § 19-504.1(b) to offer “coverage for claims made by a family member in the same amount as the liability coverage for claims made by a nonfamily member under the policy[.]” Id. Thus, according to Mrs. Stickley, the household exclusion contained in the umbrella policy was void under § 19-504.1. Id. at 353-54. This Court held that the household exclusion in the Stickleys’ umbrella policy was “a valid and enforceable contractual provision.” Id. at 368.

We explained: We begin by looking at the plain meaning of the phrase “policy or binder of private passenger motor vehicle liability insurance.” (emphasis added). By its terms, a private passenger motor vehicle liability insurance policy refers to a specific type of motor vehicle liability insurance policy. These insurance policies have been held by this Court to “attach[] to automobiles and not to individuals.” Neale v. Wright, 322 Md. 8, 16 , 585 A.2d 196, 199-200 (1991). By contrast, a personal liability umbrella policy includes coverage for a 10 myriad of losses suffered by the insured.

This might include coverage for losses resulting in “personal injury,” such as false arrest, wrongful eviction, libel, and defamation of character. The personal liability umbrella policy might also include protection against excess judgments of third parties with regard to the operation of a motor vehicle. Therefore, umbrella policies attach generally to the insured, whereas private passenger motor vehicle liability insurance policies attach to the motor vehicle and protect against injuries and/or damages resulting from the operation of the motor vehicle. Id. at 359-60.

We also emphasized that “a motor vehicle liability insurance policy is a type of primary policy that is required in the State.” Id. at 360. We observed that such “[p]rimary policies of motor vehicle liability insurance attach immediately upon the happening of the occurrence giving rise to liability, and have been required with a mandated minimum amount of coverage since the General Assembly revised the State’s automobile insurance laws in 1972.” Id. (cleaned up). An umbrella policy, we explained, “is a supplemental form of insurance that is distinguishable from more specific primary policies, such as motor vehicle liability insurance or homeowner’s insurance,” id. at 360-61, in that it “provid[es] coverage that exceeds the basic or usual limits of liability.” Id. at 361 (quoting Umbrella Policy, BLACK’S LAW DICTIONARY 808 (7th ed. 1999)).

Thus, we observed, an umbrella policy is “not merely … an extension of the primary policy, but rather [is] a distinct and different form of coverage.” Id. In addition, “the purpose of both forms of coverage are different.” Id. Whereas “primary insurance attaches upon the happening of the occurrence that gives rise to liability,” excess insurance (such as that provided by an umbrella policy) “attaches only after a predetermined amount of primary coverage has been exhausted.” Id. (cleaned up); see also id. at 362 (“Umbrella policies serve an important function in the 11 industry.

In this day of uncommon, but possible, enormous verdicts, they pick up this exceptional hazard at a small premium.”) (quoting 8C APPLEMAN, INSURANCE LAW AND PRACTICE § 5071.65 (1981)). We also examined the statute in context, noting that “[t]he subtitle at issue in the present case, ‘Subtitle 5. Motor Vehicle Insurance—Primary Coverage’ (emphasis added)” includes other provisions that also refer to “motor vehicle insurance policies providing primary coverage.” Id. at 362-63. In particular, we pointed to IN § 19-504, noting that the term “motor vehicle liability insurance policy” is used in that section to discuss the minimum amount of coverage required in a primary policy (“[e]ach motor vehicle liability insurance policy ... shall provide the minimum liability coverage specified in Title 17 of the Transportation Article.”).

Id. at 363 (quoting IN § 19-504). Similarly, IN § 19-505 “discusses the required minimum amount of personal injury protection (“PIP”) coverage in a ‘motor vehicle liability insurance policy.’” Id. (emphasis in original). We reasoned that, by including § 19-504.1 within the subtitle that governs primary layer automobile liability policies, “the General Assembly demonstrated its intention to address household exclusions in primary policies.” Id.

Thus, “[i]t would be illogical to interpret the phrase ‘motor vehicle liability insurance policy’ in [§ 19-504.1] as referring to umbrella policies, because umbrella policies, by definition, are supplemental and serve as an excess form of coverage to motor vehicle primary policies.” Id. Indeed, we observed, the only provision in Subtitle 5 that addresses excess coverage (such as an umbrella policy), IN § 19-509(h)(1), “explicitly refers to policies that are different in kind from primary policies …, discuss[ing] policies whose ‘primary purpose [] provides coverage in excess’ 12 of other forms of insurance.’” Id. at 364 (second alteration by the Court). “By its own terms, therefore, § 19-509(h)(1) explicitly distances itself from the primary motor vehicle policies discussed elsewhere in the section.” Id. We also explained that a contrary holding would lead to “a result that is unreasonable, illogical, or inconsistent with common sense.” See id. at 365. Applying this “common sense approach,” we noted “that the fundamental difference between umbrella and motor vehicle policies is underscored by the difference in premiums charged for the different coverages.” Id. “In general, umbrella policy premiums are relatively small in relation to the amount of risk so that the company cannot be expected to prorate with other excess coverages; and public policy should not demand that this be done.” Id.

(quoting COUCH ON INSURANCE 3d § 220:32 (2005)). C. The Proper Interpretation of CJP § 5-806(b) With this background in mind, we now turn to the parties’ arguments concerning the meaning of CJP § 5-806(b). The Macedos contend that the plain language of the statute renders void an umbrella policy’s household exclusion, up to the limits of the umbrella policy’s motor vehicle liability coverage, with respect to tort claims by unemancipated children against their parents. Travelers counters that the Macedos’ interpretation conflicts with the text, structure, and legislative history of CJP § 5-806.

Travelers argues that the language of CJP § 5-806 cannot be interpreted in a vacuum, but rather must be viewed in conjunction with pertinent provisions of the Insurance Article. When those provisions are considered, according to Travelers, it is clear that the phrase “motor vehicle liability coverage” in CJP § 5-806 13 (similar to the phrase “motor vehicle liability insurance” in IN § 19-504.1) refers to primary automobile liability coverage, not to coverage provided under a personal umbrella policy. The goal of statutory interpretation is to “ascertain and effectuate the actual intent of the General Assembly in enacting the law under consideration.” Pabst Brewing Co., 478 Md. at 75 (internal quotation marks and citation omitted). In conducting our analysis, “we begin with the plain language of the statute, and ordinary, popular understanding of the English language dictates interpretation of its terminology.” Blackstone v. Sharma, 461 Md. 87, 113 (2018) (internal quotation marks and citations omitted).

If the statutory language is “unambiguous and clearly consistent with the statute’s apparent purpose, [the] inquiry as to legislative intent ends ordinarily and we apply the statute as written, without resort to other rules of construction.” Lockshin v. Semsker, 412 Md. 257, 275 (2010). We construe the statute “as a whole so that no word, clause, sentence, or phrase is rendered surplusage, superfluous, meaningless, or nugatory.” Mayor & Town Council of Oakland v. Mayor & Town Council of Mountain Lake Park, 392 Md. 301, 316 (2006). Our analysis is “not confined to the specific statutory provision at issue on appeal.” Berry v. Queen, 469 Md. 674, 687 (2020). Instead, “the plain language must be viewed within the context of the statutory scheme to which it belongs, considering the purpose, aim or policy of the Legislature in enacting the statute.” Id.

(internal quotation marks and citations omitted). “To this end, it may be beneficial to analyze the statute’s relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the 14 particular language before us in a given case.” Id. (internal quotation marks and citations omitted). “Where statutory language is ambiguous and thus subject to more than one reasonable interpretation, or where the language is unambiguous when read in isolation, but ambiguous when considered in the context of a larger statutory scheme, a court must resolve the ambiguity by searching for legislative intent in other indicia, including the history of the legislation or other relevant sources intrinsic and extrinsic to the legislative process.” Hector v. Bank of New York Mellon, 473 Md. 535, 576 (2021) (internal quotation marks and citation omitted). Further, we “check our interpretation against the consequences of alternative readings of the text,” Bell v. Chance, 460 Md. 28, 53 (2018), which “grounds the analysis.” In re O.P., 470 Md. 225, 255 (2020). Doing so helps us “avoid a construction of the statute that is unreasonable, illogical, or inconsistent with common sense,” Mayor & Town Council of Oakland, 392 Md. at 316 ; see also Bell, 460 Md. at 53 (explaining that, throughout the statutory