McNeill v. Maryland Automobile Insurance Fund

SALMON, J. The issue of statutory construction to be addressed in this case is both novel and exceedingly narrow. Section 20-603 of the Insurance Article of the Maryland Code (2006 RepLVol.) provides, in material part, as follows: Notice of claim. (a) Time for filing; exceptions. — (1) Except as provided in paragraph (2) of this subsection, notice of a claim for damages must be filed with the [Maryland Automobile Insurance] Fund within 180 days after the accident out of which the cause of action arises before a person may apply or sue for payment from the [Maryland Automobile Insurance] Fund under this subtitle. (2) If notice of a claim is not filed within the time required under paragraph (1) of this subsection, a claim or suit may not be filed or maintained unless the claimant provides proof: (ii) that the claimant filed notice within 30 days after having received notice that an insurer had disclaimed on a policy and thus removed or withdrew liability insurance coverage for the claim against a defendant ....

(Emphasis added.) The appellant, Irish McNeill, admits that she did not give notice to the Maryland Automobile Insurance Fund (“MAIF”) within 180 days of July 17, 2002, which was the date of the accident that gave rise to her claim. She maintains, however, invoking the provisions of Section 20-603(a)(2)(ii), that she notified MAIF of a claim for damages within thirty days after her attorney first received notice that Allstate Insurance Company had disclaimed coverage on a policy and thus removed or withdrew liability insurance coverage for her claim against an uninsured motorist. ³⁴¹ MAIF, for purposes of this appeal, admits that Mrs. McNeill notified it within thirty days after she learned that Allstate had denied coverage to the uninsured motorist. But, relying exclusively on the decision in Unsatisfied Claim & Judgment Fund v. Holland, 241 Md. 294 , 216 A.2d 525 (1966), MAIF asserts that Allstate never “disclaimed” coverage as that term is used in Section 20-603(a)(2)(ii) 1 Instead, argues MAIF, Allstate merely notified Mrs. McNeill that it provided “no coverage” of the uninsured motorist for the subject accident. MAIF asserts that within the meaning of Section 20-603, an insurer does not “disclaim” coverage if it simply advises a claimant that there never was coverage in the first place.

I. On July 17, 2002, Irish McNeill was a passenger on a bus when a vehicle driven by Damon Dodd (“Dodd”) struck the bus. As a result of the accident, Mrs. McNeill and her husband filed a complaint in the Circuit Court for Baltimore City. The complaint alleged that Mrs. McNeill suffered bodily injuries as a result of the accident, which was solely caused by the negligence of Dodd and that the McNeills, jointly, suffered injuries due to loss of consortium due to Mrs. McNeill’s injuries. The complaint further alleged that the vehicle operated by Dodd was owned by Katherine Curran and Michael Curran and that Dodd was operating the vehicle at the time of the accident as “their agent, servant, and employee ... and within the course of [his] employment----” Katherine Curran, Michael Curran, and Dodd were the only named defendants in the complaint. ³⁴² The vehicle driven by Dodd was insured by Allstate Insurance Company (“Allstate”) at the time the vehicle collided with the bus.

Allstate retained Jessica F. Ferrill, Esq., to represent its insureds, Michael and Katherine Curran, in the lawsuit filed by the McNeills. After the Currans were served, Ms. Ferrill promptly filed an answer on behalf of both of her clients. Almost exactly one year after the accident, on July 14, 2003, Allstate sent a letter to Dodd that read: Allstate Insurance Company Claim Number: 7082922803 MCM Date of Loss: July 17, 2002 Our Insured: MICH[AE]L N CURRAN Dear Mr. Dodd: With respect to the accident in which you were involved or for which you may be legally liable, occurring on July 17, 2002 at FRANKLIN ST, BALTIMORE, the Allstate Insurance Company hereby disclaims and denies any and all liability or obligation to you or others under its policy numbered 098193039 and issued to MICH[AE]L N CUR-RAN. This disclaimer is made because of your failure to qualify under Part 1 of the policy entitled “Insured Person,” which states: “While using your insured auto: a) you, b) any resident, and c) any other person using it with your permission.” Because you were using the named insured’s vehicle without her permission, there is no coverage for this loss.

The Allstate Insurance Company will take no further action with respect to any claim which you may have against it or ■with respect to any claim or suit against you which has arisen or which may arise out of said accident and hereby withdraws from the matter entirely. In early January 2004, counsel for the McNeills was told by Ms. Ferrill that Dodd, at the time of the accident, “was a nonpermissive user” of the automobile and thus was not covered by Allstate’s policy for the claims made by the McNeills. Counsel for the McNeills, on January 27, 2004, ³⁴³ notified MAIF by fax that the McNeills intended to make a claim against it for injuries received in the July 17, 2002, accident. Counsel further advised MAIF in the fax that his clients had “just become aware of the fact” that Dodd was uninsured. 2 Not long after MAIF received notification of the McNeills’ claim, Katherine and Michael Curran filed a motion for summary judgment in the circuit court action filed by the McNeills.

The motion was supported by Katherine Curran’s affidavit in which she swore that she was the owner of the vehicle involved in the accident in which Mrs. McNeill was injured; that she had “never met Damon Dodd”; that “Damon Dodd was never an agent, servant, and/or employee ... [of hers] at any time”; that she “never gave Dodd a set of keys to said vehicle at any time”; and that “Dodd did not ask, request, or obtain [her] permission to operate the vehicle at the time of the accident at issue.” On June 7, 2004, counsel for Irish McNeill and her husband consented to the grant of the summary judgment motion and three days later the Circuit Court for Baltimore City docketed an order granting summary judgment in favor of Katherine and Michael Curran. Counsel for the McNeills on July 8, 2004, wrote a letter to the executive director of MAIF notifying him that Irish McNeill “will be having her trial [in which Dodd was the sole remaining defendant] in the Circuit Court for Baltimore City on July 20, 2004____” The letter further advised that the uninsured driver, Dodd, “had been in prison but was released ... on or about April 15, 2004.” The tort case against Dodd was called for trial on July 20, 2004. Dodd was not in attendance, nor did a representative of ³⁴⁴ MAIF appear. The court proceeded to hear evidence as to damages and later that day entered a judgment in favor of Mrs. McNeill and against Dodd in the amount of $10,480.90. 3 After the judgment was entered in her favor, Mrs. McNeill, by counsel, filed a petition in the Circuit Court for Baltimore City, naming MAIF as a defendant.

She demanded that MAIF pay the $10,480.90 judgment and alleged in her petition that, in accordance with Section 20-603(a)(2)(ii) of the Insurance Article, she notified MAIF of her claim within thirty days after having received notice that Allstate had disclaimed coverage. MAIF filed an answer to the petition in which it alleged that Mrs. McNeill’s petition was barred by Section 20-603 inasmuch as she failed to notify it of her claim within 180 days of the accident, and because the exceptions to the 180-day notice requirement set forth in Section 2-603(a) of the Insurance Article were all inapplicable. After conducting an evidentiary hearing, the court ruled that Mrs. McNeill’s notice to MAIF was untimely because Allstate “never disclaimed on a policy” and thus the exception set forth in Section 20-603(a)(2)(ii) was inapplicable. The question to be resolved in this appeal is whether Allstate “disclaimed on a policy” as that term is used in Section 20-603(a)(ii) when it wrote to Dodd and informed him that it was denying him coverage for the July 17, 2002, accident.

III

In Unsatisfied Fund v. Holland, 241 Md. at 295 , 216 A.2d 525 , the Court of Appeals was called upon to interpret a statute that, in all respects here relevant, was worded identically to Section 20-603. 4 See Md.Code Art. 66/6, § 154(a) (Cum.Supp.1965) (repealed 1972). ³⁴⁵ The accident that was the focus of the Holland opinion occurred on September 4,1960. Holland, 241 Md. at 295 , 216 A.2d 525 . Boice, the motorist who was alleged to have been negligent in that accident, was insured by the Olympic Insurance Company (“Olympic”) up until June 4, 1960, at which time Olympic canceled Boice’s policy. Id.

Three months later, on September 4, Boice was involved in an accident with one Mary Holland. Holland did not notify the Unsatisfied Claim and Judgment Fund (“UCJF”) of her intention to make a claim within ninety days of the accident. She did, however, give notice to the UCJF within thirty days of her counsel’s receipt of a letter from Olympic telling him that Boice’s policy was not in effect as of the date of the accident. Id. at 297 , 216 A.2d 525 .

The issue decided in Holland was whether the letter of November 25, 1960, from Boice’s one-time insurer to the attorney for Holland should be construed to mean that Olympic had “disclaimed liability under a policy” as that term was used in the statute. If so, then Holland’s counsel gave “notice” to the UCJF within thirty days, as the statute required. Id. at 296 , 216 A.2d 525 . The trial judge found in favor of Holland and ruled that Olympic had “disclaimed on a policy of insurance” within the meaning of the statute when it sent the November 25, 1960, letter.

The Court of Appeals reversed because “to disclaim coverage” presumes that a policy is in effect under which coverage is claimed, and Olympic’s policy was not in effect at any time pertinent. Id. at 298-303 , 216 A.2d 525 . The statute at issue in Holland and in this case was modeled after a law enacted by the New Jersey legislature in 1952. See Wheeler v. Unsatisfied Claim & Judgment Fund, 259 Md. 232, 234 , 269 A.2d 593 (1970).

Except for differences in the identity of the party to be notified and the time allowed for notification, New Jersey’s statute and Maryland’s were worded identically. See Holland, supra, 241 Md. at 298-99 , ³⁴⁶ 216 A.2d 525 ; see also N.J. Stat. Ann. § 39:6-66 to-91 (West 1961). Also, when Holland was decided, New York had a statute worded similarly to the Maryland and New Jersey statutes. Id. at 299 , 216 A.2d 525 .

The Holland Court’s resolution of the statutory construction problem presented was based almost exclusively on the reasoning in Parrot v. Chiselko, 74