Maryland Automobile Insurance Fund v. Sun Cab Co.

McAULIFFE, Judge. The principal issue in this case is whether ch. 655 of the 1977 Laws of Maryland had the effect of excluding taxicabs from the class of motor vehicles for which uninsured motorist (UM) insurance coverage is required. We shall affirm the determination of the trial court and the Court of Special Appeals that it had precisely this effect. The procedural history of the three cases that originated in the Circuit Court for Baltimore City and were consolidated on appeal was set forth by the Court of Special Appeals in Pope v. Sun Cab Company, Inc., 62 Md.App. 218, 222-24 , 488 A.2d 1009 (1985), and need not be repeated here.

It is sufficient to note that as a result of two separate accidents involving injuries allegedly caused by uninsured motorists to passengers occupying cabs owned by Sun Cab Company, two tort actions were filed. In one of the actions the plaintiffs sought UM benefits from Sun Cab, and in both actions the plaintiffs sought leave to sue the Maryland Automobile Insurance Fund (MAIF). A third action was filed, in which MAIF sued Sun Cab and all plaintiffs in the two tort actions, seeking a declaratory judgment that UM coverage continued to be required for taxicabs notwithstanding the amendment to the Motor Vehicle Casualty Insurance Subtitle of Article 48A, Maryland Code (1957, 1979 Repl.Vol., 1985 Cum.Supp.) accomplished by ch. 655 of the 1977 Laws. All parties agreed that the Legislature intended by the amendment to exclude taxicabs from the requirement of first-party Personal Injury Protection (PIP) ⁸¹⁰ coverage.

However, they sharply disagreed over whether the Legislature had intended also to exclude taxicabs from the requirement of providing UM coverage. Before addressing that question of statutory construction, we consider a procedural issue raised by MAIF. I MAIF contends that the trial judge committed procedural error by construing the statute in the tort cases, rather than in the declaratory judgment action. MAIF was a party in each of the tort actions at the time the challenged decision was made, and was given full opportunity to participate and present argument in support of its position.

The ultimate question to be determined in the declaratory judgment action was squarely presented for resolution in the tort actions, and the trial judge properly elected to resolve it as a part of those actions. Brohawn v. Transamerica Insurance Company, 276 Md. 396, 406 , 347 A.2d 842 (1975); A.S. Abell Co. v. Sweeney, 274 Md. 715, 720-21 , 337 A.2d 77 (1975). MAIF’s claim that it was thereby denied the benefit of discovery procedures it had intended to pursue in the declaratory judgment action is unavailing because the issue is one of statutory construction and no discovery was required. II By the enactment of ch. 73 of the 1972 Laws of Maryland the Legislature made substantial changes in the insurance law pertaining to motor vehicles.

Of particular significance was the addition of new §§ 538-546 to Maryland Code, Article 48A, the Insurance Code. These additional sections comprised a new subtitle, entitled “Motor Vehicle Casualty Insurance — Required Primary Coverage.” Section 538 provided definitions for the subtitle, and defined “motor vehicle” to mean: [An] automobile and any other vehicle, including a trailer, operated or designed for operation upon a public road by any power other than animal or muscular power. ⁸¹¹ Section 539 required that every policy of motor vehicle liability insurance issued, sold or delivered after January 1, 1973 include PIP coverage. Section 541, in addition to other provisions, required that all insurers offer no-fault collision coverage, and permitted the issuance of first-party UM coverage. By the enactment of ch. 562 of the 1975 Laws of Maryland the Legislature amended § 541 to require UM coverage in every policy of motor vehicle liability insurance issued, sold, or delivered after July 1, 1975, and further provided that such coverage would be primary to the right to recover from MAIF for damages caused by an uninsured motorist.

In 1977, House Bill 1272 was enacted as ch. 655 of the Laws of Maryland, changing Article 48A by amending § 538(b) and adding subsection b to § 539. The bill recited its purpose as “exempting certain vehicles, as defined in the Vehicle Laws, from certain required primary coverage insurance provisions....” We set forth § 538 as it was amended, with the new matter added shown in italics: As used in this subtitle, (a) .... (b) “Motor vehicle” means automobile and any other vehicle, including a trailer, operated or designed for operation upon a public road by any power other than animal or muscular power but does not include a vehicle as defined in § 11-165 of the Transportation Article of the Annotated Code of Maryland. Newly added § 539(b) provided: The provisions of this section do not apply to policies issued, sold or delivered in this state to insure vehicles as defined in § 11-165 of the Transportation Article of the Annotated Code of Maryland. ⁸¹² Section 11-165 of the Transportation Article, Maryland Code (1977, 1984 Repl.Vol.) defines a taxicab. 1 Section 541, which requires UM coverage, was not amended by this bill.

Appellees contend that the amendment to § 538(b) clearly excluded taxicabs from the definition of “motor vehicle” for the purposes of the entire subtitle, and therefore had the effect of excluding taxicabs from the UM coverage required by § 541 as well as the PIP coverage required by § 539. MAIF counters by arguing that House Bill 1272 is ambiguous because it specifically amends § 539 to exclude taxicabs from PIP coverage, but makes no corresponding change to § 541. MAIF argues that this ambiguity requires resort to intrinsic and extrinsic aids to determine the legislative intent. In addition to the alleged internal inconsistency in the bill, MAIF asks that we consider three indicators of legislative intent: 1) The purpose clause of House Bill 1272 demonstrates that it is intended to affect only primary coverage insurance provisions, and UM has never been classified as primary coverage by the Legislature. 2) The construction of the statute advanced by appellees would produce a bizarre result, in that it would exclude taxicabs from the requirement of mandatory liability insurance. 3) Legislative history in the form of written communications to the legislators and a Fiscal Note prepared by the Department of Fiscal Services demonstrates a contemporaneous understanding by those dealing with the bill that it affected only PIP coverage.

Initially, we find of doubtful validity the argument that the Legislature intended the phrase “primary coverage” to mean PIP and not UM coverage. Primary coverage generally refers to the policy that first must answer for the loss. ⁸¹³ As used here, however, it may well have referred to first-person as opposed to third-party coverage. In that sense, the term would apply equally to PIP, collision and UM, but not to liability coverage. If interpreted in this manner, there is no inconsistency between the purpose clause of the bill and the effect of excluding taxicabs from the requirement of UM coverage.

At the time House Bill 1272 was drafted and enacted, both UM and PIP were required coverages, and the caption of the subtitle of the Insurance Code that embraced both of them was “Motor Vehicle Casualty Insurance — Required Primary Coverage.” Consequently, there was no facial inconsistency between the stated purpose “of exempting certain vehicles ... from certain required primary coverage insurance provisions” and the effect of excluding taxicabs from PIP and UM coverage. MAIF’s second argument is based upon the familiar rule of statutory construction that a statute should not be construed in a way that would lead to absurd results, or consequences inconsistent with common sense. Blandon v. State, 304 Md. 316, 319 , 498 A.2d 1195 (1985); State v. Intercontinental Ltd., 302 Md. 132, 137 , 486 A.2d 174 (1985); Holy Cross Hosp. v. Maryland Empl. Sec., 288 Md. 685, 698-99 ,