Mundey v. Erie Insurance Group

SHARER, J. In this insurance coverage case, appellant, Richard A. Mun-dey, Jr., challenges the Circuit Court for Prince George’s County’s declaratory judgment order finding that appellee, Erie Insurance Exchange, did not owe him uninsured motorist benefits. Appellant presents two issues for our review, which we have slightly rephrased as follows: 1. Whether the trial court erred in determining that appellant was not a “resident” of his parents’ household for purposes of their automobile insurance policy. 2. Whether the trial court erred in finding that the automobile insurance policy’s uninsured motorist provisions do not violate Maryland public policy.

Finding no error, we shall affirm the judgment of the circuit court. FACTUAL and PROCEDURAL BACKGROUND On January 17, 2002, appellant, then 21 years old, was seriously injured while a passenger in a vehicle driven by his girlfriend, Amber Rose Burgess, who lost control of her vehicle and hit a tree. Ms. Burgess was found to be underin-sured, having a Maryland Automobile Insurance Fund (“MAIF”) policy providing only the statutory minimum coverage of $20,000. 1 ⁴⁴⁷ Appellant filed a complaint in the Circuit Court for Prince George’s County against Ms. Burgess, on September 18, 2002, seeking damages caused by her negligence. The complaint was amended on January 21, 2003, to include a declaratory judgment count against appellant’s parents’ automobile insurer, Erie Insurance Exchange (“Erie”), to determine if the Erie policy provided uninsured motorist coverage to appellant.

Ms. Burgess’s insurer, MAIF, paid the $20,000 policy limit, and appellant dismissed the count against Burgess, on March 11, 2003. The Erie “Pioneer Family Auto Insurance Policy” purchased by appellant’s parents provided policy limits of $250,000. The policy’s uninsured/underinsured provision, at issue in this appeal, provides, in relevant part, as follows: UNINSURED/UNDERINSURED MOTORISTS COVERAGE OUR PROMISE We will pay damages for bodily injury and property damage that the law entitles you or your legal representative to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle. Damages must result from a motor vehicle accident arising out of the ownership or use of the uninsured motor vehicle or underinsured motor vehicle as a motor vehicle and involve: 1. bodily injury to you or others we protect.

OTHERS WE PROTECT 1. Any relative. “Relative” is defined in the policy’s definitions section: “relative” means a resident of your household who is: 1. a person related to you by blood, marriage or adoption, or ⁴⁴⁸ 2. a ward or any other person under 21 years old in your care. “resident” means a person who physically lives with you in your household. Your unmarried, unemancipated children under age 24 attending school full-time, living away from home will be considered residents of your household. 2 (Emphasis in original). The declaratory judgment action came on for trial on August 26, 2004.

Neither party called live witnesses; rather, each proffered evidence from which the circuit court could have found the following: On or about February 14, 2001, appellant, then 20 years old, was arrested and incarcerated for failure to pay a court-ordered fine. Appellant’s parents, Richard A. Mundey, Sr. and Sharon Mundey, agreed to post his bail if he would agree to, inter alia, move out of their home in Lusby, Maryland, and into his grandmother’s home in Waldorf, Maryland. It was further agreed that appellant would have to get a job and “get his act together” before he could move back into his parents’ home. 3 Upon the posting of bail by his parents, appellant was released from jail and moved into the home of his grandmother, Shirley Sterling, in Waldorf. Shortly thereafter appellant got a job in Waldorf; first at Oak Ridge Construction Company and then at Damon’s Restaurant.

Approximately one month after he moved in with his grandmother appellant obtained his driving learner’s permit. 4 Appellant was not, at any time relevant to the issues in this case, enrolled in college. ⁴⁴⁹ Appellant lived with his grandmother in Waldorf for the 11 months preceding the accident. During that time he visited his parents’ home approximately four to six times. He spent the night at their house on two occasions — Thanksgiving and Christmas night. On those occasions, appellant slept on an extra bed in his younger brother’s room, as his former bedroom had been converted to other family use.

At his grandmother’s home, appellant had his own bedroom and was free to use the entire house, and the telephone. Appellant ate his meals with his grandmother and, when he was not at work, he either watched television or spent time with his girlfriend at his grandmother’s house. In December 2001, appellant’s father denied appellant’s request to move back into the family home. Except for his pay record at Damon’s Restaurant, appellant continued to use his parents’ Lusby address as his home address.

Although appellant never filed for a change of address in Lusby, his mother either brought his mail when she visited her mother, or mailed it to appellant at the Waldorf address. Alter hearing the proffers and arguments of counsel, the circuit court issued an opinion from the bench providing, in relevant part: It appears to me that the definitions used in Erie’s policy are not void against public policy, but are in fact logical, clear, and stated in plain language, sufficient to put all policyholders on notice of the extent of risk that this contract is intended to cover. The temporary residence of the [appellant] at his grandmother’s home was temporary based on the limits placed by the homeowners who are the insureds under this policy. That is it was entirely up to his parents, the named insured homeowners, to determine how long that temporary residence would continue.

The policy anticipates that issue in its specific statement regarding full-time students living away from home who are unemancipated children under age 24 ... ⁴⁵⁰ Here we have a young man who was emancipated absolutely. He was over 18. He was living and working on his own. He was not dependent for any purpose for his parents, and therefore could not even be considered an un-emancipated child over 18 ...

Only a temporary residence for school purposes for an unemancipated child between the ages of 18 and 24 would allow that person to still be continued as a member of the household. I see nothing void against public policy in this. We have, in addition, the intention declared by the parents that he was not to be considered a member of the household in any number of ways. One, they forwarded his mail to him at the other location.

Two, he was supposed to be self-supporting at another location. Three, they did not notify the insurance company of his driving on his learner’s permit because they were not permitting him to use their vehicles. All of those intentions clarify the intention that he not be considered a resident of the household at the time of this incident. It is sad, it is tragic, but it is the law, and I see nothing in public policy or in the statutory language, or in any of the appellate decisions, to suggest otherwise.

The circuit court’s oral opinion was followed by a declaratory judgment order, filed on October 19, 2004. The order declared that the relevant policy provisions did not violate public policy and that, because appellant was not physically living in his parents’ household for the 11 months prior to the accident, he was “not an insured by definition under the policy and does not qualify for uninsured or underinsured motorist coverage.” This timely appeal followed. STANDARD of REVIEW Appellant posits that the standard of review should be de novo because the case was tried without a jury and there is no question of fact. For this proposition appellant cites ⁴⁵¹ Gleneagles, Inc. v. Hanks, 156 Md.App. 543, 550 , 847 A.2d 520 (2004), aff'd 385 Md. 492 , 869 A.2d 852 (2005), where we said: Ordinarily, a decision of a circuit court regarding the grant or denial of injunctive relief will not be disturbed on appeal absent an abuse of discretion.

If, however, the decision is based on a ruling of law the trial court must “exercise its discretion in accordance with correct legal standards.” There being no dispute of fact, we shall review the issue presented on the basis of legal error. (citations omitted). As we have noted, the instant case presents an element of fact finding, as well as legal interpretation of the insurance contract. In ABC Imaging of Washington, Inc. v. The Travelers Indem.

Co. of America, 150 Md.App. 390, 397 , 820 A.2d 628 , cert. denied, 376 Md. 50 , 827 A.2d 112 (2003), we stated, “[t]he interpretation of a written contract is ordinarily a question of law for the court and, therefore, is subject to de novo review by an appellate court.” (quoting Wells v. Chevy Chase Bank, 363 Md. 232, 250-51 , 768 A.2d 620 (2001)). Therefore, as to the de novo aspect of our review, we shall adhere to the strictures of Md. Rule 8-131(c)(2004), which provides: (c) Action tried without a jury. When an action has been tiied 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.

Otherwise, we shall review the trial court’s contract interpretation for legal error. 1. Whether the trial court erred in determining that appellant was not a “resident” of his parents’ household for purposes of their automobile insurance policy. ⁴⁵² Appellant argues that the circuit court erred in determining that he did not qualify as an insured under the terms of the uninsured/underinsured provisions of his parents’ Erie automobile insurance policy. In ABC Imaging, supra, 150 Md.App. at 396 , 820 A.2d 628 , we also said that “An insurance policy is a contract between the insurer and the insured. In construing an insurance contract, we look to the rulings of this Court and the Court of Appeals, which, in Kendall v. Nationwide Insur.

Co., 348 Md. 157, 165-66 , 702 A.2d 767 , (1997), declared”: “Under Maryland law, when deciding the issue of coverage under an insurance policy, the primary principle of construction is to apply the terms of the insurance contract itself. Maryland does not follow the rule, adopted in many jurisdictions, that an insurance policy is to be construed most strongly against the insurer. Rather, following the rule applicable to the construction of contracts generally, we hold that the intention of the parties is to be ascertained if reasonably possible from the policy as a whole.” (citations omitted). Therefore, “[o]ur construction of an insurance policy is guided by the well-established principles applicable to the construction of contracts in general.” Mut.

Fire Ins. Co. of Calvert County v. Ackerman, 162 Md.App. 1, 5 , 872 A.2d 110 (2005). “In determining the meaning of contractual language, Maryland courts have long adhered to the principle of the objective interpretation of contracts. Under the objective interpretation principle, where the language employed in a contract is unambiguous, a court shall give effect to its plain meaning and there is no need for further construction by the court.” Id. at 397, 872 A.2d 110 (citations ommitted) (quoting Wells v. Chevy Chase Bank, supra, 363 Md. at 250-51 , 768 A.2d 620 ). In the case sub judice appellant challenges Erie’s definition of resident.

The policy’s “Definitions” section sets forth: “resident” means a person who physically lives with you in your household. Your unmarried, unemancipated children ⁴⁵³ under age 24 attending school full-time, living away from home will be considered residents of your household. It is the definition of “resident” that is dispositive of the issue presented. Appellant argues, first, that the court adopted a restricted definition of residence, and, next, that the court failed to consider a totality of the circumstances test that has been endorsed in earlier Maryland cases.

Forbes v. Harleysville Mut. Ins. Co., 322 Md. 689, 589 A.2d 944 (1991) (whether a spouse who has left the family home is still a “resident of the same household.”). The totality of the circumstances test emphasizes “that residence under ‘[a] common roof is not the controlling element.’ It is rather a conclusion based on the aggregate details of the living arrangements of the parties.” Id. at 705-06 , 589 A.2d 944 (quoting Davenport v. Aetna Cas. & Sur.

Co., 144 Ga.App. 474 , 241 S.E.2d 593, 594 (1978)). Appellant relies on Forbes, supra, and Willis v. Allstate Ins. Co., 88 Md.App. 21 , 591 A.2d 896 (1991). Hence, we shall discuss each in turn.

Carol Forbes was killed, and her children injured, while passengers in an uninsured motor vehicle, as a result of the negligence of the driver. Forbes, supra, 322 Md. at 692 , 589 A.2d 944 . At the time, Carol Forbes was living separate from her husband, Robin Forbes, who was insured by Harleysville Mutual Insurance Company. Id,.

The policy, which included uninsured motorist coverage, insured a family vehicle co-owned by Carol and Robin. Id. at 693 , 589 A.2d 944 . Har-leysville denied coverage to Carol Forbes under the uninsured motorist provision of the policy on the basis