Maryland Automobile Insurance Fund v. John

EYLER, JAMES R., J. Charles John filed a civil tort action against Doreen Ashu (“Doreen”) in the District Court of Maryland in Prince George’s County for injuries that Mr. John sustained in an automobile accident with Doreen. Because Doreen’s presumed insurer, Progressive American Insurance Company, ²⁰⁵ appellee, denied coverage, Mr. John also named his own insurance provider, the Maryland Automobile Insurance Fund (“MAIF”), appellant, as a defendant. Appellant’s insurance agreement with Mr. John provided Uninsured Motorists (“UM”) coverage in the event that Mr. John was injured in an automobile accident caused by an uninsured motorist. To determine coverage, Mr. John brought a separate declaratory judgment action in the Circuit Court for Prince George’s County against Doreen, appellant, and appellee.

Mr. John sought a declaration that appellee was required to cover the accident, or alternatively, that appellant was required to provide coverage under Mr. John’s own UM policy. The initial tort case was stayed pending the outcome of the declaratory judgment action. A bench trial in the declaratory judgment action was held on July 7, 2009. At trial, appellee claimed that its policy, which had been issued to Doreen’s sister, Patricia Ashu (“Patricia”), who had died a year before the accident, did not cover Doreen.

Appellant countered that, after Patricia’s death, one of appellee’s insurance agents represented to Doreen that she was covered and accepted several premium payments for that coverage. On September 25, 2009, the court issued a written order and opinion concluding that appellee was not obligated to insure Doreen. Appellant noted a timely appeal to this Court 1 . Factual Background Patricia obtained an insurance policy issued by appellee.

The policy covered her vehicle for the period of March 29, 2005 to September 29, 2005. Patricia died on May 4, 2005. At the time of Patricia’s death, Doreen was living in Patricia’s household and using Patricia’s vehicle. Two days after Patricia’s death, Doreen met with Emmanuel Fomukong, one of appellee’s insurance agents.

She relayed the news of Patricia’s death to Mr. Fomukong and asked him ²⁰⁶ to translate Patricia’s Cameroonian death certificate to English. Mr. Fomukong did so. Doreen explained to Mr. Fomukong that she wished to continue driving her late sister’s vehicle and would like to keep appellee’s insurance on it. Mr. Fomukong told Doreen that, until ownership of the car was transferred to her, she could continue driving Patricia’s vehicle with continued coverage by appellee, provided that all necessary premiums were paid.

Payments for the premiums were deducted from Patricia’s bank account until the account was depleted. At that point, on or about September 10, 2005, Doreen met again with Mr. Fomukong. They made arrangements for the insurance coverage to continue and for Doreen to pay the premiums by check, and, if necessary, by direct withdrawal from Doreen’s bank account. Doreen made all subsequent payments by check, except one, which was withdrawn electronically from her account.

Thereafter, appellee issued a renewal of the policy covering the period of September 29, 2005 to March 29, 2006, and a second renewal covering the period of March 29, 2006 to September 29, 2006. The declaration pages for both renewals, like the declaration page for the original policy, list “Fomukongs Ins Group” as the agent. Doreen paid all the premiums associated with those policy renewals. On August 21, 2006, Mary Tabot was appointed as the personal representative of Patricia’s estate.

Ms. Tabot is a distant relative of Patricia and Doreen Ashu, and was asked by Doreen to serve as personal representative because Doreen could not obtain a personal representative bond due to her lack of United States’ citizenship. On September 25, 2006, Doreen was involved in a motor vehicle accident with Mr. John while Doreen was driving Patricia’s vehicle. Doreen had been returning home after dropping a friend off at the friend’s house. Additional facts are incorporated as necessary in the discussion below. ²⁰⁷ Standard of Review Our review of this case is guided by Maryland Rule 8-131(c), which provides that: 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 credibility of the witnesses. Discussion Appellant raises three arguments on appeal: (1) the court erred in failing to find an oral contract between appellee and Doreen; (2) the court erred in failing to find that appellee is estopped from denying coverage to Doreen; and (3) public policy requires appellee to honor its promise of coverage to Doreen. Appellee contends that there is no coverage under the plain language of its insurance policy and the court did not err in its findings and conclusions. Before addressing, and ultimately rejecting, appellant’s contentions, we first consider whether Doreen was covered under the language of the written insurance policy.

The circuit court was correct in concluding that there was no coverage under appellee’s policy. We disagree with the reasoning advanced by appellee, however, and will explain. Ultimately, we perceive no reversible error, and shall affirm. 1. Coverage Under the Written Policy Both the initial insurance policy and the two renewals were in Patricia’s name only. “Absent a policy provision extending coverage, an automobile liability policy lapses on the death of the named insured.” Oroian v. Allstate Ins.

Co., 62 Md.App. 654, 659 , 490 A.2d 1321 (1985) (citing R. Anderson, Couch Cyclopedia of Insurance Law § 39.243 (2d ed.1962)). Appellee’s policy contained such a policy provision — the “transfer provision” — which provided as follows: ²⁰⁸ This policy may not be transferred to another person without our written consent. If a named insured dies, this policy will provide coverage until the end of the policy period for the legal representative of the named insured, while acting as such, and for persons covered under this policy on the date of the named insured’s death. Appellee never agreed in writing to transfer Patricia’s policy to Doreen.

Further, due to her lack of United States citizenship, Doreen was never appointed legal representative (ie., personal representative) of Patricia’s estate. The only remaining question thus becomes whether Doreen can glean coverage as a “person[ ] covered under [the] policy” (ie., an additional insured) at Patricia’s death. Appellee argues that “the coverage provided by the policy was limited to the legal representative of the Estate while operating the covered vehicle on behalf of the Estate,” and “on the date of the underlying accident, the policy provided coverage for Ms. Tabot when she was operating the vehicle on Estate business, but it did not provide coverage to Doreen Ashu to operate the vehicle for her own purposes.” We disagree and conclude that, between the time of Patricia’s death and the end of the initial policy term, Doreen was indeed a “person[ ] covered under [the] policy.” The policy’s definition of “insured person” and “insured persons” includes “[the named insured] or a relative with respect to an accident arising out of the ownership, maintenance, or use of a covered vehicle.” The policy then defines “relative” as “a person residing in the same household as [the named insured], and related to [the named insured] by blood, marriage, or adoption, including a ward, stepchild, or foster child.....” First, Doreen and Patricia were blood relatives. Second, Doreen had been living with Patricia prior to Patricia’s death, and was living in Patricia’s house both at the time of the death and following the death.

Doreen testified 2 that she moved to this ²⁰⁹ country from Cameroon in January, 2004. Upon arrival, Doreen moved into Patricia’s house, and lived there with Patricia and Patricia’s son. Doreen lived there until May 2004, when the sisters had some disagreements. At that time, Doreen moved out of the house, but for no longer than two months.

She then moved back in with Patricia. At one other time in 2005, Doreen moved out for a brief period, but returned again. Doreen was living in Patricia’s house when Patricia died, although Patricia died in Cameroon. Before leaving for her trip to Cameroon, Patricia gave Doreen her car keys, knowing that Doreen would need to drive Patricia’s son around.

Doreen continued to live in Patricia’s house after Patricia’s death, and was living there at the time of the accident. Nevertheless, appellee contends that Oroian v. Allstate Ins. Co., 62 Md.App. 654 , 490 A.2d 1321 (1985), in which this Court denied coverage under similar policy language, controls the question of coverage in this case. In Oroian , the named insured on an automobile insurance policy died.

Id. at 656 , 490 A.2d 1321 . The decedent’s sister was named personal representative of the decedent’s estate. Id. The sister permitted Oroian, a close family friend, to take possession of the covered vehicle for the purpose of keeping it in proper shape until it was appraised for estate purposes.

Id. at 660 , 490 A.2d 1321 . Oroian was involved in an accident while driving the vehicle for personal purposes (not for any estate-related purposes). Id. The decedent’s insurer denied coverage under the following provision: ... if the named insured, or his spouse as a resident of the same household, shall die, this policy shall cover: (a) the survivor as named insured; (b) his legal representative as named insured but only while acting within the scope of his duties as such; and ²¹⁰ (c) with respect to an owned automobile, any person having proper temporary custody as insured, until the appointment and qualification of such legal representative.

Id. at 656, 659 , 490 A.2d 1321 . The Oroian Court found that only paragraph (b) was applicable. Id. at 659 , 490 A.2d 1321 . Paragraph (c) was inapplicable because the accident occurred after the sister was appointed as personal representative.

Id. The Court explained that the policy terms would permit coverage if it was proven that the sister had given Oroian permission to use the vehicle, and that Oroian’s use of the vehicle was within the scope of the sister’s duties as personal representative. Id. at 660-61 , 490 A.2d 1321 . Because Oroian was using the car for personal reasons, the latter condition failed, and the Court found no coverage.

Id. at 663 , 490 A.2d 1321 . The Iowa Supreme Court held similarly, in what appears to be the only other reported case on point, Grinnell Select Ins. Co. v. Continental Western Ins. Co., 639 N.W.2d 31 (Iowa 2002).

In Grinnell, the named insured on an automobile insurance policy died. Id. at 33 . The named insured’s daughter continued driving the covered vehicle during the policy period. Id.

While driving friends to a dance, the daughter allowed one of the passengers to take the wheel. Id. The passenger crashed the vehicle, injuring persons in another car. Id.

The insurance company denied coverage under the following “transfer” provision: Your rights and duties under this policy may not be assigned without our written consent. However, if a named insured shown in the Declarations dies, coverage will be provided for: 1. The surviving spouse if resident in the same household at the time of death ....; and 2. The legal representative of the deceased person as if a named insured shown in the Declarations.

This applies only with respect to the representative’s legal responsibility to maintain or use ‘[the] covered auto.’ ²¹¹ Id. at 34 . The court found that, even assuming that the term “legal representative” could be interpreted to include the daughter, and that the passenger was driving with the daughter’s consent, “neither [the daughter] nor her consent driver was using the vehicle for anything remotely involving ‘estate’ business.” Id. at 37 . The court thus concluded that the decedent’s insurance policy did not cover the accident. Id. at 37-38 .

The case sub judiee is factually distinct from both Oroian and Grinnell. The cases do not stand for the general proposition that, after the death of a named insured, coverage is limited to the personal representative of the decedent and/or that it is limited to the operation of a vehicle, that is otherwise insured, on estate business. The language of the policy in question controls. The plain language of the transfer provision in the policy here provides coverage “until the end of the policy period” for two separate types of persons: (1) “the legal representative of the named insured, while acting as such;” 3 and (2) “persons covered under this policy on the date of the named insured’s death.” Notably, the phrase “while acting as such” applies only to the legal representative — not to other “persons covered.” Under the policy at bar, additionally insured persons need not qualify as personal or legal representatives to obtain coverage, as they must under the policy in Grinnell.

Rather, additional “persons covered” are set forth as a distinct type of covered person. The plain language of the policy thus indicates that an additional “person[ ] covered” need not be acting within the legal representative’s scope of duty in order to be covered. Neither are “persons covered” restricted to “temporary custody ... until the appointment ... of [a] legal representative,” as they are under the policy in Oroian . Here, “persons covered” are covered irrespective of the existence of a legal